Boehe, DM. 2010. Captive Offshoring of New Product Development in Brazil How Does Arbitrage Influence Local, Collaborative Relationships?. MANAGEMENT INTERNATIONAL REVIEW 50 (6): 747-773
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Boehe, DM. 2010. Captive Offshoring of New Product Development in Brazil How
Does Arbitrage Influence Local, Collaborative Relationships?. MANAGEMENT
INTERNATIONAL REVIEW 50 (6): 747-773.
Author Full Name(s): Boehe, Dirk M.
Document Type: Article
Author Keywords: Multinational corporations; Subsidiaries; Emerging economies;
Offshoring; Outsourcing; Arbitrage; Brazil
KeyWords Plus: RESEARCH-AND-DEVELOPMENT; MULTINATIONAL-
CORPORATION; INNOVATION STRATEGIES; DEVELOPING-COUNTRIES;
MANUFACTURING FIRMS; TRANSACTION COST; RESOURCES; PERSPECTIVES;
Abstract: This paper focuses on captive offshoring of new product
development (NPD), i.e., relocating projects or project phases to foreign-
based, wholly-owned, multinational corporation (MNC) subsidiaries (captive
offshore units) to benefit from cost and efficiency advantages and/or from
access to complementary technological resources and capabilities.
Adopting a host country perspective, we theorize why different forms of local
collaboration may complement or conflict with efficiency-seeking or arbitrage
strategies and may thus influence why captive offshore units receive new
product development orders from other MNC units located abroad.
Using a sample from Brazil and applying structural equation modeling with partial
least squares (PLS), we find that local NPD outsourcing constitutes a
complementary relationship, while local cooperation with clients creates a
trade-off relationship with captive offshoring. That these relationships are
moderated by the captive offshore unit's cost position within the MNC suggests
that arbitrage effects transcend the headquarter-subsidiary relationship into
the sphere of MNC subsidiaries' local collaborations.
Our findings imply that arbitrage in multinational contexts affects the
interdependence between resources and transaction costs.
Addresses: Insper Inst Educ & Res, Sao Paulo, Brazil
Reprint Address: Boehe, DM, Insper Inst Educ & Res, Sao Paulo, Brazil.
E-mail Address: dirkMB at insper.edu.br
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