Manufacturing Small And Medium Size Enterprises Offshore Outsourcing And Competitive Advantage: An Exploratory Study On Canadian Offshoring Manufacturing SMEs

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Muhammad Mohiuddin
Zhan Su

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Abstract

This paper explores whether and how theoffshore outsourcing of the manufacturing SMEs creates competitive advantagesfor these firms. The offshore outsourcing strategy is widely criticized in thedeveloped countries for allegedly reducing job opportunities, missing scaleeconomy, diminishing innovation potentialities and creating various socialproblems. The present article with empirical data from thirteen Canadianoffshoring manufacturing SMEs attempted to address that the world-widedistributed co-production network could instead increase profit and marketshare, boost investment in R&D, raise focus on core competency and enhancecompetitivity of offshoring SMEs. This strategy enables companies to enhancetheir competitiveness by allowing them to have access to the competitiveproduction factors and new markets for their products. This paper contributesto the existing body of knowledge by showing that not only the largemultinationals but also the SMEs can achieve competitive advantages fromoffshoring part of their activities to foreign firms where those tasks can beperformed more competitively.

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