Transforming capabilities in offshoring processes longitudinal development of organizational resources and routines in four danish offshoring enterprises

Purpose – This paper aims to focus on how organisational capabilities, enhancing the dynamic capability perspective, evolve duringa more than fve-year offshoring process in four Danish small- and medium-sized enterprises (SMEs). The strategic decision to offshore some manufacturing activities meant that capabilities were ruptured and had to be rebuilt. Design/methodology/approach – The empirical investigation took the form of qualitative case studies with a longitudinal orientation focussing in on a few events in the four cases (strategic change in the sourcing confguration) as a process research design (Pettigrew, 1990; Van de Ven, 2007). Interviews were transcribed and coded in NVivo. Findings – The four cases followed distinct trajectories, but they all changed their routines regarding how to handle knowledge, including both technology and human resources. A need for specifc human resources acting as boundary spanners arose, transforming both intra- and inter-organisational practices in all four cases. More complex activities were moved offshore to enhance the dynamic capabilities of the companies regarding both product developmentas well as specifc processes, thereby transforming/reconfguring the organisational capabilities of the companies. However, in the two small-sized cases, more complex/less routinised activities were backsourced, demonstrating a signifcant problem over time with the development of suffcient organisational resources to maintain seizing and sensing capabilities within these companies in comparison with the two other medium-sized cases. Research limitations/implications – The fact that most of the data were generated from an inside-out perspective, taking the point of departure in the core frms, can be viewed as a limitation. The authors’ data on the wider network are also limited. Finally, the authors’ interviews are conducted relatively infrequently when considering the length of the process. Practical implications – The four longitudinal cases show that the longer-term offshoring journey does not involve a single path or a single best practice. The cases show captive as well as outsourcing arrangements and even enterprise transformations. The cases demonstrate a common focus on fnding and nurturing core suppliers and core business processes, which can be characterised as continual learning and development of organising capabilities. Originality/value – The study contributes to the growing body of research into dynamic (organisational) capabilities in an offshoring and SME context.