Relocating Low-to-Medium Tech Manufacturing Activities to Developing Countries: Empirical Analysis of Taiwanese and South Korean Manufacturing Outsourcing to Bangladesh

Antecedents of Second Order Outsourcing by Manufacturing Suppliers in Low-Cost Countries

“…For example, some large manufacturing firms are not good in all areas of outsourcing activities, however, some other small and medium supplier are specialized in some areas of their core functions. Therefore, second-order outsourcing allows large manufacturing firms to access those best specialists of other suppliers who have hands-on experiences in non-core activities of focal firms (Rashid & Azad, 2013). Consequently, we can propose the following hypothesis.…”

“…Reducing operating cost is one of the most cited factors in the literature that influences manufacturing firms to outsource part of activities to suppliers. The main motivation behind outsourcing is to reduce primary capital investment, space expenditure, and fixed and variable costs (Rashid & Al-Azad, 2013). Through outsourcing manufacturing firms can reduce operational cost and investment in plant and investment (Bettis et al, 1992), therefore, this variable proposes three components (such as investment in capital machineries, fixed and variable cost and floor space utilization) of hypotheses that allow firms to reduce operating cost related to manufacturing process.…”

“…Aron & Singh (2005) found that lack of internal resources and capabilities would make outsourcing strategy as an attractive and cost-effective option that let them to concentrate on core business functions (Mohiuddin, 2011). Advantages of Outsourcing are multiple (Mohiuddin & Su, 2013a;Rashid & Al-Azad, 2013). Some of them are lower operating cost, improved competitiveness, lower capital investment and shifting resources towards core competencies based on firm activities, generate economy of scale, explore new market, access to third parties capability, reducing risks and make idle capital available for further specialization of core competencies (Rashid & Al-Azad, 2013).…”

Offshore Outsourcing of Manufacturing SMEs and Developing Value Ladder

“…The previous research on offshore outsourcing was dominated by the cost advantages of arm's-length offshoring of large enterprises (LE). Offshore outsourcing, however, can also enable SMEs to have access to emergent expertise and low-cost/high-value innovations (Rashid & Al-Azad, 2013) and develop dynamic capabilities for sustainable competitive advantage (SCA). According to Helfat, Finkelstein, Mitchell, Peteraf, Singh, Teece, and Winter (2007), dynamic capability is the capacity of an organization to purposefully extend, create, or modify its resource base.…”