Doctor of Philosophy, The Ohio State University, 2016, Business Administration

In the last fifteen years there has been a drastic increase in the outsourcing of manufacturing activities to offshore suppliers, otherwise known as offshore outsourcing. These offshore outsourcing endeavors have often encountered a variety of unanticipated or hidden costs. While these hidden costs can manifest in a variety of forms, two of the main variations are intellectual property risk (i.e., supplier poaching) and quality risk (i.e., supplier shirking). The research in this dissertation utilizes dyadic data from 109 manufacturer-supplier relationships to investigate how the institutional environment of a supplier's location influences the effectiveness of different safeguards and relationship management practices, which can result in increased poaching and shirking. Understanding how to control these hidden costs of outsourcing is what differentiates successful outsourcing relationships and is of critical importance to manufacturers. Manufacturers are often putting their innovations at risk by outsourcing to suppliers in geographical locations that do not protect intellectual property. For that reason, poaching, or supplier's unauthorized use of a buyer's proprietary information, has been considered one of the main hidden costs of outsourcing. The strength of property rights has also been suggested to influence the effectiveness that safeguards have on poaching. Building on these arguments, this dissertation investigates how property rights impact the effectiveness of two safeguards, supplier transaction specific assets and communication, on poaching. Property rights are found to not only have a direct effect on supplier poaching, but they also change the effectiveness of both safeguards. In weak property rights locations, communication is found to be more effective in reducing poaching. Interestingly, in weak property rights locations not only are supplier transaction specific assets less effective in reducing poaching, but increases in these investments (open full item for complete abstract)

Committee: W.C. Benton Jr. (Advisor); Peter Ward (Committee Member); James Hill (Committee Member); Sean Handley (Committee Member) Subjects: Business Administration