Home bitter home: How labor protection influences firm offshoring

David H. Weng*, Mike W. Peng

*Corresponding author for this work

Research output: Contribution to JournalArticleAcademicpeer-review

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Abstract

Drawing on the home country literature, we argue that firms headquartered or located in countries with strong labor protection may face challenges in their domestic operations. These firms are likely to initiate offshoring to enhance operational efficiency. Building on this argument, we also examine the boundary conditions moderating this proposed effect including labor productivity and employee stock ownership. Results based on a sample of information technology firms operating within five developed countries during 1990–2010 provide support for these arguments. These findings suggest that offshoring can be a partial exit strategy for firms to address the institutional challenges in their home country.

Original languageEnglish
Pages (from-to)632-640
Number of pages9
JournalJournal of World Business
Volume53
Issue number5
Early online date9 Apr 2018
DOIs
Publication statusPublished - Nov 2018

Funding

We acknowledge the contributions made by Special Issue Editors Alvaro Cuervo-Cazurra, Yadong Luo, and Ravi Ramamurti; Associate Editor Siah Hwee Ang; two reviewers; and participants at the JWB Special Issue Workshop (Boston, June 2017). We also appreciate the helpful comments from Gautam Ahuja, Dane Blevins, Elizabeth Lim, Zhiang Lin, Brian Pinkham, Roberto Ragozzino, Don Siegel, and Bill Wan. Earlier versions were presented at the City University of Hong Kong, Georgia State University, University of Texas at Dallas, as well as the Academy of Management, and the Academy of International Business. This study was supported, in part, by the CityUHK Start-Up Research Grant (No. 7200268 ) and the Jindal Chair at UT Dallas .

FundersFunder number
Academy of International Business7200268
City University of Hong Kong
Georgia State University

    Keywords

    • Employee stock ownership
    • Home country
    • Labor productivity
    • Labor protection
    • Offshoring

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