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

[Eugene Garfield]

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.
Language: English
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; 
PERFORMANCE; INTERNALIZATION

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
ISSN: 0938-8249
DOI: 10.1007/s11575-010-0054-z
Fulltext: http://www.springerlink.com/content/f8814q2251u74740/