Strategic orientation in the globalization of software firms

Jason Dedrick, Kenneth L. Kraemer, Erran Carmel, Debora Dunkle

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

In the search for profits, software firms are globalizing their development activities. Some firms achieve greater profits by becoming more efficient, whereas others do so by reaching new markets; some do both. This paper creates an a priori typology of strategies based on the extent to which firms are focused on operational improvement or market access, have a dual focus or are unfocused. We find that firms with these strategies differ in degree of internationalization, organization of offshoring and performance outcomes related to offshoring. Market-oriented firms receive a greater proportion of their total revenue from sales outside the U.S., showing a greater international orientation. They keep more of their offshore development in-house via captive operations. They also are most likely to report increased non-U.S. sales as a result of offshoring. On the other hand, operations-oriented firms have lower levels of international sales, are more likely to go offshore via outsourced software development, and achieve greater costs savings and labor force flexibility as a result of offshoring. Operations-oriented firms also face more obstacles in offshoring, perhaps because of their reliance on outsourcing. Dual focus firms generally achieve some of the best of both strategies, whereas unfocused firms achieve lower cost benefits. The research shows that it pays to have a well-defined strategy for going offshore, and that firms with an explicit strategy are more likely to achieve performance consistent with their strategy. It further shows that captive and outsourced offshoring result in different obstacles and outcomes. In general, market-oriented firms that use captive offshoring versus outsourced offshoring perform better in developing non-U.S. sales.

Original languageEnglish (US)
Title of host publicationGlobal Sourcing of Information Technology and Business Processes - 4th Global Sourcing Workshop 2010, Revised Selected Papers
PublisherSpringer Verlag
Pages1-25
Number of pages25
ISBN (Print)3642154166, 9783642154164
DOIs
StatePublished - Jan 1 2010

Publication series

NameLecture Notes in Business Information Processing
Volume55 LNBIP
ISSN (Print)1865-1348

Keywords

  • Globalization
  • captive vs. outsourced arrangements
  • firm performance
  • obstacles
  • offshoring strategy
  • software development

ASJC Scopus subject areas

  • Management Information Systems
  • Control and Systems Engineering
  • Business and International Management
  • Information Systems
  • Modeling and Simulation
  • Information Systems and Management

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  • Cite this

    Dedrick, J., Kraemer, K. L., Carmel, E., & Dunkle, D. (2010). Strategic orientation in the globalization of software firms. In Global Sourcing of Information Technology and Business Processes - 4th Global Sourcing Workshop 2010, Revised Selected Papers (pp. 1-25). (Lecture Notes in Business Information Processing; Vol. 55 LNBIP). Springer Verlag. https://doi.org/10.1007/978-3-642-15417-1_1