International Journal of Operations & Production Management

Emerald Article: A case study of national culture and offshoring services Richard Metters

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To cite this document: Richard Metters, (2008),"A case study of national culture and offshoring services", International Journal of Operations & Production Management, Vol. 28 Iss: 8 pp. 727 - 747 Permanent link to this document: http://dx.doi.org/10.1108/01443570810888616 Downloaded on: 08-05-2012 References: This document contains references to 80 other documents To copy this document: permissions@emeraldinsight.com This document has been downloaded 3285 times.

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A case study of national culture and offshoring services

Richard Metters
Goizueta Business School, Emory University, Atlanta, Georgia, USA
Abstract
Purpose Prior surveys have shown that national culture is a leading cause of problems in offshoring services. The research question posed in this paper centers on how and through what specic decisions national culture affects operational implementation in offshore facilities. Design/methodology/approach A particular US service process offshored to Barbados and the Dominican Republic is studied. Ethnographic worker observations are combined with archival sources and executive interviews. Findings A culture clash caused a number of operational dilemmas for a major US airline offshoring the same processes to two Caribbean nations. The offshoring was a success at one site, a failure at another. But, even at the successful site, un-intuitive operational adaptations had to be made to accommodate cultural differences. Specically, detailed here are decisions or results seen on country selection, location selection within a country, quality program implementation, and shift work that had strong cultural inputs. Research limitations/implications Any case study may be limited to the specic case. However, broader implications are that operations management decisions may be more highly dependent on national culture than previously thought. Practical implications Management especially US management continue to make service offshoring decisions ignoring or minimizing the inevitable cultural conict. This work provides tangible examples of decisions affected by culture. Originality/value Concrete, specic examples are provided for the difculties national culture created in a specic case. Methods used to circumvent these difculties are shown. By this specic example, the general case is posited that culture must be considered in operations decisions that may seem devoid of cultural content. Keywords Total quality management, Relocation, Outsourcing, National cultures Paper type Case study

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Received June 2007 Revised April 2008 Accepted June 2008

Introduction In a widely reported forecast by Forrester Research, it was stated that 3,400,000 white collar jobs with $151 billion in annual wages will leave the US for low wage countries by 2015 (Hilsenrath, 2004). In contrast to that forecast, a recent estimate concluded that the order of magnitude of actual job losses in the US due to offshoring was in the low hundreds of thousands, rather than millions (Kirkegaard, 2007). We have seen this cycle before for the same processes. In 1982, the New York Times stated that due to satellite telecommunications technology (w)hite collar and technical work of all levels of sophistication can now be farmed out to wherever labor is cheaper (Pollack, 1982). Likewise, Business Week touted the instant offshore ofce where back-ofce processes for US rms could be done overseas for a fraction of the
The author would like to acknowledge the assistance provided by Carla Freeman on many drafts of this work. Her assistance was more than worthy of authorship.

International Journal of Operations & Production Management Vol. 28 No. 8, 2008 pp. 727-747 q Emerald Group Publishing Limited 0144-3577 DOI 10.1108/01443570810888616

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labor cost (Business Week, 1982). However, it was estimated that only 5,000 offshore workers of this type existed in 1986 worldwide (Noble, 1986), and offshore service workers do not exceed 35,000 worldwide in 1994 (Wilson, 1995, p. 206). Services offshoring has thus far not lived up to the promise/hype of the above statements. There have been two surveys regarding corporate offshoring experience that provide insight into this gap. A convenience sample of 60 executives involved in offshoring information technology services cited cultural differences as the most important major problem in offshoring (Aelera, 2004). A survey of 96 US companies that had or were planning to offshore service operations was undertaken by Lewin et al. (2005). The most cited risk of sending work overseas was service quality, with cultural t being second, cited by 59 and 58 percent of respondents, respectively. These surveys can be viewed as barometers indicating the importance of culture. However, the precise nature of cultures signicance is ambiguous. A question unanswered by these surveys and the academic literature reviewed later is exactly how and in what manner does culture impact operations? How do rms change their operations in response to cultural issues? The research question addressed here is how and in what form does culture impact the offshoring of service processes. Here, we draw on a past experience with offshoring to inform the present. Specically, we trace how culture altered the operational choices in an offshored back-ofce service operation. A set of processes for a major US airline were moved from the USA to Barbados and the Dominican Republic. In the words of the president of the offshore subsidiary, who went on to become CEO of the parent airline, the culture clash between the USA and Barbados was such that there were problems I never anticipated, things that were not on our radar screen. The problems with Dominican Republic culture were even greater. Owing to space reasons, we will only highlight the effect of culture on three traditional operations choices: location, shift work, and total quality management (TQM) implementation (more information on ownership choice owning versus outsourcing and the operational implications of worker type are available from the author). The remainder of this work is organized as follows: after describing the methodology, a review of prior literature regarding culture and business practices among varying business disciplines is sketched to provide context. Specic ndings are then discussed. Concluding remarks include the study limitations and generalizations. Methodology The inspiration for this paper is a collection of publications by a professor of Womens Studies and Anthropology, Carla Freeman (1998, 2000, 2001). Because of Ms Freemans ties to anthropology and womens studies, her focus was not on operations management. Instead, she was concerned with views of female work in Barbados. Partially, this paper is a translation of this anthropological work to focus on operations management. The methodology employed by Freeman is ethnography. Though it is unusual in business research, ethnography is one of the oldest eld research traditions and the cornerstone of anthropology (Miller and Crabtree, 1999, p. 29). Freeman spent three years in the eld, mainly in Barbados, observing three specic sites where back-ofce work from the USA was being offshored. This research had the cooperation of the parent companies. Two of those sites were from the same company, which Freeman calls Data Air for purposes of condentiality, and is the subject of this investigation.

This rm performed back-ofce services for one of the large US air carriers often called the legacy airlines. But Freemans eld work encompassed only the time period 1989-1992. The airlines processes were serviced in Barbados from 1983-1998. Extending Freemans data, the author of this paper consulted numerous other archival sources, and interviewed executives (hereafter called informants, as is the custom in interview research) from the companies in question. The interviews occurred later in the investigative process. The interviews were conducted after reading all of Freemans work; performing background investigations of the industry, individuals, and the countries involved; and obtaining extensive background on the rm in question from archival sources. This rm was famous in its time, so such background was plentiful, if a bit difcult to nd. The closed questions asked were derived from the specic categories of cultural issues these other sources identied. The open questions sought further categories of issues and other informants. Early contact: the informants were rst contacted by postal mail or e-mail with a customized letter. The letter contained a project explanation and introduced the investigator. The interviews were with a series of high status individuals who had unique experiences, rather than a collection of people who had similar experiences. They had the following different experiences: . (Informant A) President of the Data Air unit and later CEO of the parent airline company. . (Informant B) location search and facility setup. Hired the initial Barbados staff and was the rst General Manager of Data Air. . (Informant C) ran day-to-day operations as Managing Director for 18 years and is a Barbadian citizen. . (Informant D) closed the facility and moved the operations to Juarez, Mexico, and is currently Regional CFO for Latin America and the Caribbean for the parent airline company. As a consequence, the interviews were conducted as informally as possible to elicit spontaneous statements and insights from the individuals. While an interview protocol was followed, the goal was to treat the interview as a conversation. As is customary for such disparate experts, while there was a general interview guide, each expert had their own version of the interview guide (Werner and Schoepe, 1987, p. 293). There was no compensation for the interviews. No deceptive devices were employed. The semi-structured interviews were of 40-60 minutes duration and followed an interview guide (available from the author), asking directive questions concerning TQM, shift work, ideal employees, location choice, differences between the Dominican and Bajan facility, and open ended questions regarding cultural adaptation. The interviews were by telephone, as the subjects lived in geographically distributed areas (Dallas, Boston, Miami, and Barbados). The interviews were not tape recorded. Rather, extensive notes were taken simultaneous to the conversation. Owing to the expert nature of the informants, there was a limited ability to test the interview guide prior to implementation. Testing was limited to other interested faculty.

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Denition and views of national culture Culture can be a difcult term to dene precisely. Hofstede, a leading business researcher of national culture, denes culture as the collective programming of the mind that distinguishes one group or category of people from another (Hofstede, 1980, p. 260). Culture tends to be a latent construct that manifests itself though customs, attitudes, status symbols, and other means. The business literature contains numerous articles that explore how, or imply that, national culture is critical to managerial practices or organizational strategic adaptation. A prevalent attitude in the west in general, and the USA in particular, could be summarized as why should culture matter? This attitude actually has been measured. Trompenaars (1993) surveyed 15,000 managers from 28 countries over a ten year period. Through factor analysis, a concept of universalism and particularism emerged as a cultural characteristic. For our purposes, universalism can be described as people believe that what is true and good can be discovered, dened, and applied everywhere (Hoecklin, 1995, p. 41). Particularism, alternatively, is a view that unique circumstances and personal relationships determine what is right and wrong. The USA was the most extreme universalist society studied. As relates to this current work, it seems fair to state that those who form their attitudes through US culture like the rm in question are more likely to believe that programs and methods that work well here can be easily exported. Specically, a call toward the type of research offered here is made by McLaughlin and Fitzsimmons (1996, p. 56), discussing services globalization: With globalization, the impact of cultural adaptation will need to be central to our study of [many] operational topic areas . . . . As will be shown later, operations management work incorporating culture is relatively scarce. The scarcity of such work may be due in part to our methods. Cultural issues do not present themselves to be solved by linear programs. Less often seen qualitative methods may be more appropriate. As noted by Starr (1997, p. 116), Operations managers need some knowledge derived from applied and cultural anthropology. It is with this in mind that we borrow from the eld of anthropology here. Literature review: studies of culture in various business disciplines Operations management literature does have substantial international content, but often that content is not culturally informed. Further, the focus is usually on manufacturing. Cultural differences often have more opportunity to surface in service processes than manufacturing processes. For example, in customer contact centers or collections, customers directly interact with employees. In service processes such as accounts receivable or medical transcription, at a minimum, language similarities may be paramount, and customization is often high, sometimes requiring customer contact, contact with a foreign employee, or other times requiring line employees to decode instructions written by someone in another country. Service processes are also different from manufacturing processes in that other aspects play no role: There are usually no tariffs on services, and there is little or no transportation charge for their delivery. So, especially for services that can be electronically transmitted, there are dissimilar barriers to offshoring than there are for offshoring manufacturing processes. The interaction of international culture and business is commonly studied in other business disciplines. Hofstedes (1980) work showed that basic cultural differences

exist in a business environment. Hofstedes work focused on employees of one rm, IBM, but who were from many different countries. Hofstede established that these workers have different attitudes regarding appropriate supervision styles, power relationships, and other issues that can be traced to national origin. We do not rely on Hofstedes work here. For our purposes, his work showed that national cultural differences could transcend corporate cultural similarities and have the potential to present signicant challenges to managers. There are a myriad of practitioner-oriented books and articles on culture and business practice, but these studies focus on social norms, negotiation and communication rather than operations (e.g. proper uses of e-mail in different countries). Books and articles on special methods of doing business in China (Mankin and Cohen, 2004), Korea (Chang and Chang, 1994), Islamic countries (Wright, 1981), etc. abound. Academically-oriented studies in the organization and management disciplines note the differences in humor between cultures, provide specic direction on cultural issues surrounding management rotation programs, negotiation styles, and meeting protocol, to name some topics among many. A review of studies concerning culture and organizational structures can be found in Lewin and Kim (2004). The eld of Information Systems has also seen culturally oriented research (Marron and Steel, 2000; Gopal et al., 2003). A large number of marketing and operations studies also feature different techniques and attitudes that relate to culture, with a general result that studies conducted in one country may not be generalizable to others because of national culture effects (Voss et al., 2004, p. 214). Most such studies with cultural content focus on consumer behavior. For example, Voss et al. (2004) explored the differences between how UK and US consumers evaluate service quality. Typical studies also include cultural aspects of forming service expectations (Donthu and Yoo, 1998) and service perceptions (Matilla, 1999). There are also studies on consumer behavior differences in industrial purchasing settings (Money et al., 1998). These efforts have been called national character studies (Clark, 1990), as they attempt to characterize some type of national behavior. Other literature regarding service operations and culture includes a general survey of service operations and cultural adaptation by McLaughlin and Fitzsimmons (1996) and the International Service Study of Roth et al. (1997). This paper also purports to characterize such behavior. But an essential difference is that instead of viewing consumer cultural effects, we focus on the production of services that is, how culture affects how work is performed. A literature review of international operations strategy articles (Prasad et al., 2001) found 92 such articles in 31 selected journals from 1986-1997. Culture was never mentioned in the paper, the word services appears only once. None of the 92 articles focused on services or had any derivative of the word culture in the title, and only one of the articles listed appeared to have services content. Prasad and Babbar (2000, p. 229) reviewed 548 international operations management articles in 28 journals published from 1986-1997. They note that few articles on international services appeared in the set of journals reviewed. The main topic of service was listed for only 14 of the 548 articles, and none of those 14 have signicant cultural content. Prasad and Babbar identied 32 articles involving culture, all of which focus on manufacturing. Nearly, half focused on cultural aspects of purchasing, mainly focusing on Japanese management techniques.

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Other work focused on nding international differences in techniques. For example, Whybark (1997) focuses on two manufacturing industries, and documented the different operational practices in different parts of the world. Nakata and Sivakumar (1996) explored culture and new product development. It should be noted that International Journal of Operations and Production Management is a leader in publishing operations management research with cultural content, with several articles integrating these concepts that are too recent to be covered in the Prasad et al. study (Pagell et al., 2005; Prasad and Tata, 2003; Jiang et al., 2007). Summarizing cultural research in operations, Prasad and Babbar (p. 230) write (o)ur review . . . highlighted specic areas that still need to be examined. For example, cultural inuences could be examined in regards to facility location, capacity, productivity, forecasting, scheduling, aggregate planning, inventory control, services, and project management. Our current work is a step in moving this agenda forward and in connecting the knowledge generated in anthropology with operations management. Environment description Barbados is a small Caribbean island (population 280,000). Data Air was founded in 1983 in Barbados as a wholly-owned subsidiary of a major US airline. The facility focused on work transferred from Tulsa, Oklahoma, USA. This work involved physically keying in information from every ticket stub from the airlines 2,000 daily ights into computer databases. The tickets were own in by the airline on regularly scheduled passenger ights. Once the facilities began operation, additional back-ofce work was obtained by typing warranty cards and processing insurance claims from other rms, as well as accounts payable work and cargo invoice processing from the airline. The airline invested $3 million in facility set up, including $2 million to purchase a communications satellite channel to send work back electronically to the US Costs included $480,000/year rent for two communications earth stations. The airline claimed the facility saved $3-$4 million per year (Posthuma, 1987, p. 34, 35, 39). By 1984, the facility had 288 workers. By 1990, there were about 1,000, and it was the largest private employer in the country (World Bank, 1995, p. 52). In the mid-1990s there were 1,500 employees (Informant C). The primary dates of observation by Freeman were 1990-1992. Information regarding times prior to and after those dates was gathered by interviewing personnel that worked there or by archival data. Data Air was sold by the parent airline to an information processing conglomerate in 1997 and the operations were consolidated with the new rms larger facilities in Juarez, Mexico by the new owner in 1998 (Informant D, Informant C). The sale did not reect poor performance it was part of a parent company strategic initiative in which all subsidiaries were sold (Informant D). The Barbados facility was considered a major success by airline management (Informant A). It was a showcase of the data processing industry (Freeman, 2000, p. 12) and was the subject of many positive press stories over the years in US newspapers (Yearwood, 1993) as well as numerous plant tours (Informant C). A sister facility was founded in the Dominican Republic (population nine million) in 1987 and operated for several years, but was considered not anywhere near as successful as the Barbados facility (Informant A). According to all the informants, the primary incentive for the airline to move the work was cost reduction. Wage rates in Barbados were one-half to one-fourth the wage

rates paid in Tulsa for the same position. Wage rates in the Dominican Republic averaged one-half that of Barbados (Informant A, Freeman, 2000, p. 101). The minimum wage in Barbados at the time was $2.20/hour, compared to $0.55/hour in the Dominican Republic and $4.28/hour in the USA (Safa, 1995, p. 43, all numbers in US dollars). Beyond the wage rate savings, governmental concessions also played a role. As a national strategic endeavor, Barbados desired to bring in work of this nature. A general title for this work is informatics, as it relates to information processing, rather than manufacturing tasks. Informatics work may be desirable to the government for several reasons: It is viewed as more modern than manufacturing, as well as being viewed as more clean, with little visible pollution stemming from such work, and a more pleasant, ofce-like working environment. The rm that is the subject of this paper was one of the rst in Barbados and by far the largest, but by 1997 there were 44 such rms employing over 3 percent of the countrys workforce in Barbados and 74 rms in the Caribbean (Dunn and Dunn, 1999, pp. 7, 12). The Barbados government assisted through reduced tax rates, location assistance, employee recruitment, duty free import/export of equipment, tax free income for non-residents, and start-up grants to offset training costs. The Dominican Republic offered similar inducements (Posthuma, 1987, BIDC, 2006). A note on some basic cultural elements of the two societies is important. The Dominican Republic was founded by Spain and retains a Spanish heritage. Spanish is the ofcial language. Barbados, in contrast, is known colloquially as little England and was founded by the English, who arrived in the seventeenth century, nding no inhabitants. The English imported African slaves, largely to support sugar plantations. The current population is 90 percent descendants of African slaves. Barbados gained its independence in 1966, but relations between the countries remain strong. English is the ofcial language. Consequently, although the islands are close in geographic proximity, they are distant in cultural dimensions, with Barbados being labeled part of the Afro-Caribbean and the Dominican Republic is part of Latin America (e.g., Yelvington, 2001). Important for an analysis of the informatics industry is the nature of female work in Barbados, as historically nearly all the workers in the informatics industry in Barbados are female (Bibby, 1996; Pollack, 1982; Nathan, 2000). While this may be offensive to westerners, anthropologists have noted that in many cultures it is primarily men who work outside the home to support a family, and the work of women especially young women is seen as providing pin money, or extra income that is not essential to the family (Safa, 1995). In Barbados, however, historically women and women with children have always worked due to the slave heritage (Freeman, 2000, p. 71). Over 40 percent of Barbadian households are female headed (Freeman, 2000, p. 249). Further, Barbadian women tend to continue working after marriage. While a woman and children may be the only occupants of a specic home, the broad and deep family relationships provide a network to help both with child care and nances (Freeman, 2000, p. 127). Operational concerns: facility location Location between countries Traditionally, the literature has treated cost as the central concern for locating back-ofce service facilities (MacCarthy and Atthirawong, 2003; Metters and Vargas, 2000). The service facility location chapter of a leading service operations textbook

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focuses on minimizing distances or minimizing costs (Fitzsimmons and Fitzsimmons, 2004). Recent research has challenged that view, indicating that many contextual factors might be relevant for services offshoring (Stringfellow et al., 2008; Bhalla et al., 2008). Here, we present some specic examples of cultural issues that should be considered. The basic point of offshoring this work was to reduce costs. However, two unusual location outcomes were observed: First, the lower wage country, the Dominican Republic, was an inferior performer (in quality, cost, and response time) compared to higher wage Barbados (Informant A, Informant C). Secondly, within Barbados lower cost locations were not chosen, and rms that did choose lower cost locations did not succeed. It is not unusual for a higher wage country to succeed while a lower wage country fails, even if the main criterion is cost. Here, we try to answer the question, why?. The relative success of the Barbadian versus the Dominican facility can be attributed to both cultural and structural issues. Barbados has a better educational system, with a 99 percent literacy rate versus 75 percent in the Dominican Republic at the time (Safa, 1995, p. 22), and the country is English speaking. Barbados has better roads, is more politically stable, has a more reliable power supply, and is perceived as less corrupt (Transparency International, 2006). These structural issues are important, but are not the only criteria for success. Although the Dominican Republic has lower literacy and fewer English speakers, that facility did not suffer from a shortage of workers. Further, speaking the same language the work is written in is not essential for performing the work. An accepted technique is termed key what you see, and relies on character recognition rather than knowing the language (Posthuma, 1987). Politics and corruption are factors, but not large ones: The Dominican government wanted these facilities, so such issues would have worked in their favor. Unreliable electric power is certainly an important issue, but less so for these types of facilities than some manufacturers. In the words of Hill (2000, p. 42), a reliable power supply is an order-losing sensitive qualier for, say, an electric-arc furnace steel plant. That is, uninterrupted power supply is so important to many manufacturers that the Dominican Republic would not even be considered as a possible location. Service sector facilities like Data Air are affected by this issue, but not to the same degree. Despite higher wages, the Barbados facility was less costly than the Dominican facility. An important factor in keeping costs low was the low attrition rate in Barbados. The attrition rate during the years under study was only 2 percent in Barbados (Freeman, 2000, p. 120). Informant A described attrition for the 15 year history of the Barbados facility thus: There was no attrition. Attrition was 40 percent in the Dominican Republic, consistent with the experience in the US facility and with work of this type in general in Western nations. Lower attrition causes lower costs due to smaller human resource stafng, search costs, and learning curve effects. Beyond the low attrition, absenteeism was extremely low, with 97 percent attendance over the 15 years the Barbados facility was open (Informant C), a stark contrast to the 10-12 percent absenteeism the process had in Tulsa (Informant A). The low absenteeism and lack of turnover, combined with employees staying in the same jobs for years, provided an ideal environment for productivity. The employees in Barbados had been at their jobs so long, and there was so little attrition, that training and written process descriptions were not needed, which caused severe problems as the processes were moved (Informant D).

The reason for the exceptionally low attrition rate is found in the composition of the workforce. The workforce in the two countries had a noticeable difference: Gender. The Barbadian workforce of Data Air was nearly entirely female. The Dominican workforce was 40 percent male (Freeman, 2000, p. 15). The history of Barbados plays a role here. In Barbados, women have always worked outside the home. Their views on what work should accomplish for them are also different than in other cultures. As a general rule, upward mobility in the company hierarchy was not desired. This is not because upward mobility was not desired, per se, but very few data entry personnel wanted to be supervisors, as supervisory status would complicate the social climate between workers:
Reservations [. . .] about assuming the personal dynamics of power and authority were the reasons that few of the data entry operators I interviewed expressed interest in being promoted to supervisory positions. The disinclination to promotion included keyers who had been working on the system for more than seven years [. . .] As Pauline, a data entry operator said: I am not really interested in moving up. Although it may be boring, I just prefer to sit there [in data entry]. I really dont know much about the upper work, but you have to be able to control the group, bring them together, understand their problems, and then the supervisor gets pressure from management [. . .] I think its tough. [. . .] (T)he women develop friendships and a sense of shared interest with their fellow production workers. The movement into positions of authority, therefore, involves what some describe as an expression of betrayal the idea that she was one of us, but now she has gone to the other side. (Freeman, 2000, p. 158, 159).

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The Dominican workforce, however, did not share these views. In the Dominican facility, where nearly half the operators are men, and where the life span of a worker averages two years, the jobs are envisioned by many as useful stepping stones toward other computer-related work (Freeman, 2000, p. 149). Consequently, after mastering the tasks involved, which did not take long, many men quit. Compounding this problem was the behavior of the Dominican female workforce. The women recruited for these jobs were largely young and recently out of school. The company viewed women fresh from school as most desirable (Informant C). However, as noted by Safa (1995, p. 42) in her book on female workers in the Dominican Republic and Cuba, a general ideal in many countries is that single women worked, but . . . left employment upon marriage. And as a matter of practice, (m)any Dominican men . . . may even forbid them to continue working after marriage (Safa, 1995, p. 118). In general, female labor force participation in Barbados is 57 percent, as opposed to 15 percent throughout Latin America (Freeman, 2000, p. 91). The point of the job in Barbados was grounded in West Indian culture and traditions of getting by (Freeman, 2000, p. 48). Many in the west may nd the description of the lack of desire to be upwardly mobile offensive, but it is part of their culture. As a consequence, rewards for high performance should be culturally tailored. Rather than rewarding hard work with promotions, it was rewarded with certicates for free travel on the airline parent company, a perk that was especially prized by workers (Freeman, 2000, p. 250). The point of the job in the Dominican Republic for men was to advance a career, or for women it was to earn money until marriage. Consequently, there was an attrition rate of 40 percent at the Dominican facility (Informant C, Freeman, 2000, p. 47), even though the unemployment rate in the Dominican Republic was 47 percent for women

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and 12 percent for men at the time (Safa, 1995, p. 21). High attrition causes higher recruitment and training costs, as well as learning curve effects on productivity. In 1998, when the work was moved from Barbados to Juarez, Mexico, there were interesting effects. The attrition rate in Juarez was 40 percent. Quality and response time also suffered, with the rst year in Juarez frequently seeing backlogs of 20 days worth of work (Informant D). Facility location within Barbados Like most countries, real estate in Barbados is less available and more costly in the city than in rural areas. Further, worker transportation issues are more difcult for working in the city. Workers could not afford their own automobiles. The workers largely lived in outlying rural areas and relied on local bus transport to the industrial park. Although Barbados is a small island, due to island geography there is usually only one road to take to get into the city, and those roads are typically only one lane in each direction. There are ofcial bus stops approximately every 200 yards, but buses often also stop at unofcial points when commuters signal a desire for a ride. Consequently, commuting even the relatively short distance into town could take an hour for a ten-mile drive. Indeed, 36 percent of the workers reported one-way commutes of longer than an hour (Pantin, 1995, p. 52). Yet, all of the informatics rms at that time had their ofces in the capital city of Bridgetown:
While most informatics companies are located in a centralized information processing zone in the capital city of Bridgetown, one company recently set up an operation in the countryside to save women the commute, and save themselves transportation costs demanded by women on the night shift. The experiment failed miserably, however [. . .] Despite the early hours and often long bus rides demanded by shift work, women prefer to go to town (Freeman, 1998, p. 256).

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The location decisions seem to be a contradiction. The purpose of moving the work from the US was to lower costs, yet they chose facility locations that increased cost. The contradiction can be resolved when cultural issues are assessed. The jobs at Data Air were held in high esteem. However, this was not due to the pay. Workers averaged $95/week at Data Air. However, a job as a sugar cane cutter had the potential to pay far more. A good cane cutter could make up to $250/week. Yet, Barbados had to import workers from Guyana to perform cane cutting (Hutson Sugar Museum, 2007) even though unemployment was 24 percent (Freeman, 1998, p. 249). In contrast, each opening at Data Air had an average of about ten applicants (Posthuma, 1987, p. 45, Informant C). The Data Air wage level was approximately the same as the wages at local factories, and yet the appeal of these jobs far surpassed that of traditional industries such as garment assembly (Informant C). Interviews with workers indicated a prestige ranking of jobs that did not correlate with pay. In Barbados, however, data processors openly acknowledge [. . .] that they could earn more money in the cane elds but prefer [. . .] informatics (Freeman, 2000, p. 48):
Some women acknowledged that they could be making more money even as domestic or agricultural workers. Their wages are comparable to or only slightly higher than those in a garment or electronics factory (and many have actually had those jobs). Signicantly, however, all argued that they would rather be in informatics [. . .] While they acknowledge little difference in pay [between garment work and informatics], they clearly asserted that

working in informatics is a step above working in the garment factories. Illustrating this point was the expression of disbelief and even indignation on the part of several data processors when they learned of a fellow worker who quit her job as a keyer and was now working at a [. . .] cigar factory (Freeman, 2000, pp. 214-15). While women unanimously considered the prestige and status of teaching, nursing and other predominantly female (professional) arenas to be greater than that of a data processor, many also perceived their job on par with that of other clerical workers and superior to that of hotel workers, domestics, and agricultural workers, in status if not in pay (Freeman, 2000, p. 230).

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This high esteem also did not correlate with the nature of the work. Workers describe the work as boring (Freeman, 2000, p. 171). In a survey of the workers, 49 percent stated the work was repetitive, an additional 47 percent called it monotonous, while 4 percent called the work interesting (Pantin, 1995, p. 47). Management describes the work as a dreadful job, boring work (Informant A). Beyond the work itself, the work environment is problematic:
Through the computer [. . .] informatics lends itself to a level of worker control and surveillance far exceeding that found in other manufacturing industries and in traditional ofce settings. [They] monitor workers error rates, speed, quantity of items processed, lapses in keying, and length and frequency of breaks [. . .] Donna described the lack of freedom inside the informatics workplace. Every thing you do has to go on a time sheet. I personally call it slavery [she laughs]. Everything you do they keep track of. You call it the off-time sheet. It really burns me [. . .] Claire made the same point [. . .] There aint no freedom nowhere. Not in here. Unlike on the traditional factory assembly line, where workers amuse themselves and break the monotony of their jobs by talking and joking with their fellow workers, on the data entry oor talking is minimally allowed (Freeman, 2000, p. 199-200).

Further, exible scheduling on the part of the workforce (e.g. staying late, coming in early, coming in on weekends and working double shifts) was expected (Freeman, 1998, p. 253). Independently, Posthuma (1987, p. 48) also relates that ofce work is regarded as prestigious in the Caribbean, and workers are proud to tell their families and friends about their jobs. A noticeable difference between American workers in back-ofce jobs and Barbadian workers is clear just by looking at them. As back-ofce workers never see customers, dress standards are usually casual in US facilities. In facilities the author is familiar with, jeans and t-shirts are common attire. In Barbados, however, the attire of the informatics workers is elaborate. Colorful and relatively expensive dresses are worn to work, and signicant expense is devoted to obtaining jewelry and purses:
In fact, professional dress is as important for the workers commute as for the workplace itself [. . .] Indeed, unlike their urban American counterparts who don smart suits with running shoes en route to the ofce, the Bajan data operators display shiny patent leather or well polished shoes and bags on their commute to work or fast food lunch break. In the chilly recesses inside, however, high heels are often kicked under desks, in favor of stocking feet, plastic slippers or [. . .] sneakers (Freeman, 1998, p. 256).

Workers are dropped off by the bus system at the central bus depot in downtown Bridgetown. The Data Air facility is a fteen minute walk from the bus depot through the crowded main shopping areas and pedestrian malls of Bridgetown. Despite the length of the walk and the uncertain footing on the uneven, rough pavement the

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workers chose to walk to work in high heels, and transfer to more comfortable footwear once in the ofce, exactly the opposite of what is seen in US cities. The attire of the workers seems irrelevant to a manuscript on operations management, but it provides us a key insight into a non-traditional location decision that had to be made. In short, it would appear that part of what the workers want from their jobs is to be able to go into Bridgetown and be seen. The feeling of working and being in the city is part of the allure. When the facility was moved to the rural areas, there was less of a point to dressing up there was no-one around to see you. To summarise, the operational decision of location was inuenced by culture. The goal of the rm in bringing the work to Barbados was cost reduction, but the best location for the facility was the more expensive one. Similarly, the government of Jamaica created a free trade zone with many governmental advantages in a relatively rural area of the island. However, of the several dozen informatics rms in Jamaica, the nancially successful ones were located in the largest city, Kingston, which did not benet from the governmental assistance (Posthuma, 1987). Operational concern: total quality management implementation The role of national location in TQM programs has been studied previously. Usually, though, these studies do not explicitly involve culture. The research question that is usually tested is, roughly, is TQM universal? So, the success or failure of TQM programs in different countries is assessed without specic causes of failure being assigned. In looking at national location and the success of TQM the record is mixed. Several studies have come to the conclusion that national location matters (Dalhgaard et al., 1998; Rungtusanatham et al., 1998; Roney, 1997; Mersha, 1997; Yoshida, 1989), while others conclude that it does not (Rungtusanatham et al., 2005; Dahlgaard et al., 1998; Mitki and Shani, 1995). There have been studies that try to assign causes to TQM success or failure. Two prototypes for how operations management researchers approach this problem are embodied by Ebrahimpour (1985) and Rungtusanatham et al. (2005). Ebrahimpour develops a list of operational and managerial differences between two countries, and states that one country produces better quality than another. Rather than ascribing those differences to culture, which would make them difcult to imitate, Ebrahimpour suggests that the methods and technologies of the superior performing country be adopted. That is, Ebrahimpour implicitly incorporates Trompenaars (1993) universalist mindset. In Rungtusanathan et al. specic quality practices are noted to be either different or the same in various cultures. That is, a survey is taken of numerous rms in different countries and a statistical assessment is made as to whether rms operating in different countries are different or not based on countable practices. While these two approaches provide valuable insight, they may not fully envelop TQM. The two methods listed above answer the question what practices are different but not why are they different? As noted by Roney (1997), TQM is embedded with cultural values and assumptions which are consistent with its culture of origin. So, in the ethnographic view, a third approach is taken. Through viewing personal interactions and understanding local history, reasons why TQM may be better adapted to one culture than another are explored. In the general business literature Roney (1997) and Yoshida (1989) take this view, but such views are not seen in traditional operations management journals.

Regardless of the universality of TQM, the early implementation of a TQM program at Data Air was a failure (Informant A, and C). Certainly, many TQM programs fail. Characteristics of over 100 successful and failed programs have been explored in a longitudinal study by Taylor and Wright (2003), but culture was not among the variables studied, and all the programs were in the UK An ethnographic study of a particular TQM failure in a US rm (Bushe, 1988) highlighted corporate culture issues surrounding TQM that are relevant here. Bushe found that the TQM failure was the result of several issues that were also present in Data Air. In Bushes paper, there were large status differentials between workers and management and different categories of workers. For example, when a TQM project of line workers pointed to a machine design aw of higher status engineers, the suggestions were resisted. Further, the corporate culture valued performance over learning, and the lengthy training time was perceived as wasteful. Informant A describes the failure at Data Air as due to culture. The TQM methodology was not the way they thought of things. Freemans work in Barbados centered on two informatics rms. The following describes a TQM implementation in the other informatics rm in Barbados which Freeman observed:
Although the [. . .] participants (supervisors and managers) obediently recited the company mission statement aloud, followed along though thick manuals of total quality guidelines, and entered in (reluctantly) to the role playing and small-group episodes organized by the consultants, the sessions were rife with contradictions. Participants nodded when asked whether communication channels were open across levels of the hierarchy and whether, as supervisors and managers, they rewarded production workers for their good work more than they criticized them for mistakes. The seminar was an exercise in idealization and false afrmation that made no progress toward confronting deeply rooted management problems, because there, as in the production process itself, those lower on the ladder adeptly afrmed exactly what their superiors said or would want said, regardless of their true beliefs, resentments, and experiences. With some sense of defeat, Roark [the general manager] described the difculties he faced in actually realizing his goals of TQM and revealed a number of ways in which understanding the local work force had eluded him [. . .] I didnt understand West Indian culture at all. Id be telling people to do things and theyd say okay, yes, yes, and nod in agreement and then simply not do them. Theyd rather say yes and then gure Id forgot, than say no and have to explain. [. . .] The seminars with the TQM group yielded few results. [. . .] In an attempt to invigorate and reconstitute the agendas of the PACS [the term Data Air gave to quality circles], Data Airs general manager became a consultant member of all groups, bringing their focus more directly to work-related issues. He said, in some, there have been roaring arguments, and in one the group came up with eighteen ways in which the supervisor wasnt doing his job. [. . .] The tension between a rhetoric of equal participation and voice in the management process and the reality of hierarchy and power is palpable in some of these gatherings (Freeman, 2000, pp. 184, 185, 188). At the Data Air facility: When TQM was introduced, the inter-hierarchical teams and attempts at Japanese style participatory work circles were met with suspicion and unease. Some women complained that meeting together with managers just wasnt right, and that the mandatory use of rst names, designed to enhance familiarity and a corporate family ethic, was awkward and even disrespectful (Freeman, 1998, p. 248).

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While TQM is often seen as empowering workers, it exacerbated tensions in many Barbadian rms. A strike at the local electric company in December 1996 produced

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placards denouncing TQM. . . (Freeman, 2000, p. 195). It would seem that as a matter of culture, Bajans do not communicate in the ways prescribed by TQM. Informant C, however, stated that after the observation time of Freeman, and after years of trying, the TQM program nally became a success. To achieve that success, the corporate model was tossed and the Barbados facility practiced TQM our way. According to Informant C, the Bajan way involved a complete leveling of the hierarchy, as well as requiring employees to practice TQM in their private life with one-third of their performance evaluation revolving around TQM being applied to some aspect of their home life. Informant C also attempted to implement TQM in the Dominican facility, but was never successful. Similar to the quote from Freemans work above, the Dominican culture was too hierarchical. In Informant Cs words, the Dominican workforce was particularly subservient and expected paternalism. Quality was achieved through inspection. In the Barbados facility, a single worker was entrusted with keying in data. In the Dominican Republic facility, quality was achieved through inspection. Three keyers independently typed in the same data, and the results compared to achieve quality. Consequently, the wage advantage over Barbados was negated. Beyond issues of quality control, this also meant that the Dominican facility was not entrusted with time-sensitive work. While keying in used airline tickets does not appear to be time sensitive, the airline could not recognize revenue until the tickets were keyed, so there was pressure to have no backlog (Informant D). Further, the higher order claims processing work done in Barbados was also often time sensitive, so it was not given to the Dominican facility (Informant C). The TQM and national location argument presented here is somewhat tangential to the debate in the literature. Articles in the literature have counted TQM practices performed, or concluded that a society is better at TQM and directed us to adopt that societys practices. Here, the focus is on practice localization, that is, determining how the benets of TQM can be garnered by adapting it to local culture. Operational concern: shift work Owing to the lower salaries in Barbados versus the US, the relationship between the costs of capital and labor are different. It has been noted that when offshoring work to lower wage countries, the balance of labor and capital should shift to increasing the amount of labor (Agrawal et al., 2003). While the costs of computing equipment are relatively small today, that was not the case during the time and place under study here. Wages were $95/week per employee, but the limited bandwidth communications earth station rental was $9,230/week. Also, the word processing hardware systems used were expensive. Because the workers were to be sitting all day the rm purchased ergonomic chairs then costing $400 each (Informant B). Because of the large amount of xed costs, it was desirable to run the equipment 24 hours per day if possible. These rms typically had a day shift that worked approximately 7a.m.-4p.m., a swing shift (also called night shift) that worked 4-11p.m., and a graveyard shift that worked 11p.m.-7a.m. (Dunn and Dunn, 1999, p. 9). In our case, a specic incident of shifting to more labor culminated in the addition of a work shift. In both the Dominican and Barbados facilities, a third graveyard shift (11p.m.-7a.m.) was added. For the Dominican facility, this was not a difculty. But for the Barbados facility, the effort was initially tried and abandoned (Informants A and B).

Initially, just getting workers to accept a swing shift was difcult (Informant B). Even though the day/swing shift received 3,000 applicants for 60 jobs in 1993 (Freeman, 2000, p. 145), and unemployment was 24 percent in general, and 30 percent among women (Freeman, 1998, p. 249), the workers would not work the night shift.
Opposition to the graveyard shift was so strong that one manager said it was worth doing just about any alternative arrangement for getting the work done than to demand such late night hours. He said, Bajans are homebodies. You nd most just want to be back home with their family, and not out at work at night. Again, the quiet conservatism of the Barbadian cultural milieu was contrasted with that of the Dominican Republic, where a graveyard shift operates more steadily amid a lively culture of the street (Freeman, 2000, p. 165).

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Informant C states that Barbados is a day-time island, and that introducing the graveyard shift was extremely difcult. Socially, the Barbados beaches are largely deserted by Barbadians after dark, and the peak hours for nightclubs are before midnight. However, by 1995, twelve years after opening the facility, a graveyard shift was nally operating. Informant C stated that the difculty was reorienting people on how to live on a third shift. Extrapolating this to other cultures and times, night shift work is extremely common in offshored services due to the vast time zone differences between the West and India and the Philippines. In India in particular, night shift work is seen as counter to their culture especially for women. Consequently, night shift call center work is highly populated by men in India (Richard, 2006; Dony and Pande, 2003). Discussion and summary As noted in the introduction, the offshoring of back-ofce service processes from high-wage to low-wage countries has garnered signicant popular attention. However, while it seems that many call centers have been offshored, there are still an estimated three million people in North America working in call centers (Gilson and Khandelwal, 2005). While several notable Western rms have sent the processing of accounts receivable, employee benets, or other electronically transmittable back-ofce services offshore, the vast bulk are still performed within the home countries. Owing to the sharp decreases in telecommunications costs since 2000, and the ubiquity of computer and language skills in some low-wage countries, there are no longer technical reasons for much of this work to remain in high-wage countries. However, as the surveys cited earlier suggest, a primary reason for the slow pace of work movement may be cultural conicts. If this is the case, we believe the work represented in this paper can be instrumental in understanding why and informing business practice. In business practice, the author is aware of many processes that have been offshored, failed, and have been brought back to the home country. It is possible that operations are mistakenly offshored due to perceptions created by the media and consultants that processes can be offshored without considering cultural issues the universalist mindset described in the introduction. For example, the reason offshoring was rst considered for Data Air is because the airline CEO read the 1982 BusinessWeek article on back-ofce offshoring referenced earlier and assumed cost issues were the only considerations (Informant B). The author is also aware of recent failed call centre offshoring adventures with cultural content. In an case known to the author, a US home improvement chain, where the mainstay of business are homeowners who work on their own homes, offshored calls to a culture where homes

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were not made of the same materials and the cultural ethic was to hire others to make repairs. The employees lacked basic product knowledge due to the culture they lived in. After elding many customer complaints, a crystallizing moment arrived when an executive listened in on a customer call regarding defective roof shingles. The response from the call center agent was whats a shingle? Cultural understanding may assist in determining which processes remain in high-wage countries in a structured manner. Future research in this area could include model building for appropriate decision making that includes cultural factors. In this particular instance, we highlighted the operational decisions of location choice, TQM implementation, and shift work as these issues did not conform to standard textbook theories. It could be argued that these ndings are specic to Barbados, and many of the reasons for these issues are due to the specicity of Barbadian history. Consequently, this does not mean that these issues will be resolved similarly in such a workplace in, say, India or the Philippines. Rather, the general conclusion that may be garnered is that the national and regional cultures of each area must be assessed individually. Many of the cultural aspects observed here appear to be directly related to choices now being made. Offshoring facility location in India and the Philippines follow a similar pattern to that of Barbados. Call centers and BPO facilities are nearly always in high-rent urban or suburban areas, rather than in rural ones (Farrell, 2006). It is unclear that this is optimal. Research questions emanating from this empirical fact of location decisions could explore the reasons why and determine optimal location policies. The failure of TQM programs described here centered on the strength of hierarchy in the culture. A measure of heirarchy strength appears in virtually all studies of culture. It is related to the concept of Power Distance (PDI) found in the cultural studies of Hofstede (1980, ch.3) and the GLOBE study (House et al., 2004), which has an analog called achievement-ascription in Trompenaars (1993). In a sentence, Power Distance is the measure of how much power inequality is tolerated or expected in a society. In high PDI countries, strict hierarchies are expected, and the decisions of superiors are not questioned. In low PDI countries, subordinates have more of a role in decision making and discussion. From the comments made about TQM implementation in the Dominican Republic and Barbados, it would appear that a high PDI was a root cause in the failure of TQM. This is especially relevant for offshoring at the current time, as the PDI of countries that have been successful with TQM, Japan, the UK, and the USA, for example, are low PDI countries, and the countries gathering the offshored work, such as India and the Philippines, are high PDI countries (Hofstede, 2006). The literature is mixed on this issue, with qualitative assessments from Kumar and Sankaran (2007) indicating that certain high power distance structures actually support TQM, whereas Papalexandris and Panyotopoulu (2004) argue the reverse. We have focused on the effect of culture on several particular characteristics. It should not be construed that these were the only operational choices affected by cultural differences. Two important topics not discussed for reasons of space here were the choice to outsource and the effect of workforce composition on operations. More broadly, consider the words of Informant A, the Barbados unit president and later the airline CEO: The culture clash between the USA and Barbados was such that there were problems I never anticipated, things that were not on our radar screen.

This study has the strengths and limitations inherent in ethnography. In an ethnographic study, a small group is studied at a particular place and time. Traditional business researchers may call this a weakness, as specic results may not generalize to other areas of the world at other times. But this is a view that is colored by Trompenaars (1993) universalist mindset which here is a view that management practices should be translatable across cultures. To an anthropologist, this view misses the main point. The need for ethnographic study is precisely because local specically matters. That such a study is very much local is its strength. What is generalizeable about studying back-ofce service operations in Barbados is similar in nature to the previously mentioned quote from Voss et al. (2004, p. 214): studies conducted in one country may not be generalizable to others because of national culture effects. The job of the business researcher can be to build models that include such effects. Limitations and extensions The specic problems that occurred in the transfer of these particular processes are unlikely to occur in other environments. Beyond the normal limitations of a case study, this case study is limited because it involves the culture of Barbados, which has a limited capacity for international business due to its small size. Further, the accuracy of remembered events from the informants can be questioned. However, it should be noted that there was no need for nger-pointing and blame laying for mistakes here. Adaptations had to be made, but the Barbados facility was a major success. It is hoped that this work can be extended towards more co-operative work with anthropologists. As noted by Prasad and Babbar (2000) and Starr (1997) earlier, there are many operational topics that may have signicant cultural content, but the standard toolset of the OM researcher is not equipped to elucidate or even uncover them. Owing to their techniques and training, anthropologists bring different views and different tools to the table than the traditional business researcher. Here, the subject was a more conventional use of anthropology: studying a foreign culture. However, industrial anthropologists investigate a wide array of topics that could inform OM researchers and shape future theory.
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