Transforming capabilities in offshoring processes – Longitudinal development of organisational resources and routines in four Danish offshoring enterprises

Purpose – This paper aims to focus on how organisational capabilities, enhancing the dynamiccapability perspective, evolve during a more than five-year offshoring process in four Danish small- andmedium-sized enterprises (SMEs). The strategic decision to offshore some manufacturing activitiesmeant that capabilities were ruptured and had to be rebuilt.Design/methodology/approach – The empirical investigation took the form of qualitative casestudies with a longitudinal orientation focussing in on a few events in the four cases (strategic changein the sourcing configuration) 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 regardinghow to handle knowledge, including both technology and human resources. A need for specific humanresources acting as boundary spanners arose, transforming both intra- and inter-organisationalpractices in all four cases. More complex activities were moved offshore to enhance the dynamiccapabilities of the companies regarding both product development as well as specific processes, therebytransforming/reconfiguring the organisational capabilities of the companies. However, in the twosmall-sized cases, more complex/less routinised activities were backsourced, demonstrating asignificant problem over time with the development of sufficient organisational resources to maintainseizing and sensing capabilities within these companies in comparison with the two other medium-sizedcases.Research limitations/implications – The fact that most of the data were generated from aninside-out perspective, taking the point of departure in the core firms, can be viewed as a limitation. Theauthors’ data on the wider network are also limited. Finally, the authors’ interviews are conductedrelatively infrequently when considering the length of the process.Practical implications – The four longitudinal cases show that the longer-term offshoring journeydoes not involve a single path or a single best practice. The cases show captive as well as outsourcingarrangements and even enterprise transformations. The cases demonstrate a common focus on findingand nurturing core suppliers and core business processes, which can be characterised as continuallearning 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