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Low-Cost versus Innovation: Contrasting Outsourcing and Integration Strategies in Manufacturing
University of Gävle.
KTH, School of Industrial Engineering and Management (ITM), Industrial Economics and Management (Dept.), Industrial Economics and Management (Div.).
2009 (English)In: Creativity and Innovation Management, ISSN 0963-1690, E-ISSN 1467-8691, Vol. 18, no 1, 35-47 p.Article in journal (Refereed) Published
Abstract [en]

This paper analyses how two different outsourcing manufacturing strategies relate to plant performance and innovation capability when taking into account the organizational integration of design and manufacturing as well as product complexity. The study discriminates between low-cost-oriented outsourcing and innovation-oriented outsourcing. The empirical data used is based on a survey of 267 engineering firms, of which half have outsourced manufacturing. We found that the two outsourcing strategies do have different effects, which illustrates that outsourcing represents a trade-off between improving innovation capability and lowering costs. The study furthermore shows that manufacturing and supplier integration in product design processes is mainly beneficial when applying innovation-oriented outsourcing, and in particular when products and manufacturing processes are complex.

Place, publisher, year, edition, pages
2009. Vol. 18, no 1, 35-47 p.
National Category
Business Administration
URN: urn:nbn:se:kth:diva-62858DOI: 10.1111/j.1467-8691.2009.00510.xOAI: diva2:482688
QC 20120507Available from: 2012-01-24 Created: 2012-01-20 Last updated: 2012-05-07Bibliographically approved

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