The International Journal of Logistics Management

Operational effects and firms' responses: Perspectives of New Zealand apparel firms on
international outsourcing
Yang Yu Valerie Lindsay
Downloaded by UNIVERSITY OF INTERNATIONAL BUSINESS AND ECONOMICS At 18:39 19 September 2016 (PT)

Article information:
To cite this document:
Yang Yu Valerie Lindsay, (2011),"Operational effects and firms' responses", The International Journal of
Logistics Management, Vol. 22 Iss 3 pp. 306 - 323
Permanent link to this document:
http://dx.doi.org/10.1108/09574091111181345
Downloaded on: 19 September 2016, At: 18:39 (PT)
References: this document contains references to 61 other documents.
To copy this document: permissions@emeraldinsight.com
The fulltext of this document has been downloaded 1014 times since 2011*
Users who downloaded this article also downloaded:
(2006),"Outsourcing effects on firms' operational performance: An empirical study", International
Journal of Operations & Production Management, Vol. 26 Iss 12 pp. 1280-1300 http://
dx.doi.org/10.1108/01443570610710551
(2007),"Outsourcing strategies for apparel manufacture: a case study", Journal of Manufacturing
Technology Management, Vol. 19 Iss 1 pp. 73-91 http://dx.doi.org/10.1108/17410380810843462
(2011),"Managing production outsourcing risks in China's apparel industry: a case study of two apparel
retailers", Supply Chain Management: An International Journal, Vol. 16 Iss 6 pp. 428-445 http://
dx.doi.org/10.1108/13598541111171147

Access to this document was granted through an Emerald subscription provided by emerald-srm:485147 []
For Authors
If you would like to write for this, or any other Emerald publication, then please use our Emerald for
Authors service information about how to choose which publication to write for and submission guidelines
are available for all. Please visit www.emeraldinsight.com/authors for more information.
About Emerald www.emeraldinsight.com
Emerald is a global publisher linking research and practice to the benefit of society. The company
manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as
providing an extensive range of online products and additional customer resources and services.
Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee
on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive
preservation.

*Related content and download information correct at time of download.

 The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0957-4093.htm

IJLM
22,3 Operational effects and firms
responses
Perspectives of New Zealand apparel firms
Downloaded by UNIVERSITY OF INTERNATIONAL BUSINESS AND ECONOMICS At 18:39 19 September 2016 (PT)

306 on international outsourcing

Yang Yu and Valerie Lindsay
School of Marketing and International Business,
Victoria University of Wellington, Wellington, New Zealand

Abstract
Purpose The purpose of this paper is to clarify the impact of international outsourcing on
manufacturing strategy and performance of apparel manufacturing firms. The authors aim to show
how managers address the effects of international outsourcing on four dimensions of manufacturing
strategy cost, quality, flexibility and delivery.
Design/methodology/approach The paper utilises a qualitative exploratory approach. The
authors adopted a case study method, collecting data through face-to-face, semi-structured interviews
with managers of six apparel manufacturing firms, selected on the basis of a number of criteria,
including their use of international outsourcing.
Findings The findings show that international outsourcing generates both positive and negative
effects on the firms competencies in four manufacturing dimensions (cost, quality, flexibility and
delivery). A conceptual framework is presented that shows how firms managerial actions carried out to
address the effects of outsourcing play a crucial role in determining their manufacturing performance.
Research limitations/implications Because the sample comprised small and medium-sized
apparel firms from New Zealand, the findings may lack generalisability. Further research could
expand this work to large multinational companies and service providers in international outsourcing.
Practical implications The findings suggest that managers of apparel firms which engage in
international outsourcing of manufacturing need to consider the impacts on their manufacturing
strategy, particularly with respect to the potential trade-offs between the manufacturing priorities.
Originality/value The paper addresses a research gap in the outsourcing and manufacturing
literatures by exploring the effects of international outsourcing on manufacturing strategy, and the
impact of managerial responses to these effects, on firm performance.
Keywords New Zealand, Garment industry, Small to medium-sized enterprises,
International outsourcing, Manufacturing strategy, Manufacturing performance, Apparel
Paper type Research paper

Introduction
Outsourcing refers to the procurement of goods and services from external third
parties, which are previously provided internally (Lankford and Parsa, 1999). In todays
globalized market, outsourcing beyond national boundaries, or international
outsourcing has become a popular industry phenomenon. However, the overall
The International Journal of Logistics impact of international outsourcing on firms remains unclear, as research attention has
Management mainly been directed to whether and where to outsource, in other words, the
Vol. 22 No. 3, 2011
pp. 306-323 decision-making aspect (Gilley and Rasheed, 2000; Gorg and Hanley, 2004). In addition,
q Emerald Group Publishing Limited scholars note that although small- and medium-sized enterprises (SMEs) are actively
0957-4093
DOI 10.1108/09574091111181345 engaged in international outsourcing (Sen and Haq, 2010), they are often overlooked
 in the literature because it is large multinational corporations (MNCs) that usually New Zealand
attract interest from previous researchers (Di Gregorio et al., 2009). apparel firms
The present study is intended to contribute to the literature regarding these two
issues. Our focus is to investigate how international outsourcing may affect firms
manufacturing performance. This inquiry consists of two specific questions. To begin
with, the extant literature has documented diverse effects of international outsourcing
Downloaded by UNIVERSITY OF INTERNATIONAL BUSINESS AND ECONOMICS At 18:39 19 September 2016 (PT)

on four operational or manufacturing dimensions of firms specifically cost, quality, 307

flexibility and delivery. Yet, most previous research tends to focus on one or two
dimensions, and a comprehensive investigation is seldom seen (Dana et al., 2007). In this
study, we examine all the four dimensions in order to gain a fuller understanding of their
effects on manufacturing strategy. Moreover, according to manufacturing strategy
theory in the field of operations management, the four dimensions are shown to have
diverse effects highlighting their conflicting nature. Because firms competencies in
these four dimensions contribute to their manufacturing performance (Gupta and
Zhender, 1994), a crucial task for firms in practice is to manage the trade-offs arising
from these conflicts (Silveira, 2005). This elicits our second question how firms
address the (complex) effects of international outsourcing on the four dimensions, in
order to achieve optimal manufacturing performance? The study is concerned with the
New Zealand apparel industry, in which firms are generally small compared to the
international norm for the industry; however, many have adopted international
outsourcing as a common business practice (Chetty, 1999). The findings are thus
presented from the SME perspective.
The rest of the paper contains four sections. First, in the literature review, we briefly
introduce the global and New Zealand apparel industry. Then, we describe existing
studies on the impact of international outsourcing, and shift the primary focus
to the four dimensions of manufacturing strategy. Manufacturing strategy theory is
reviewed, providing the theoretical background for the study. Second, we reiterate our
research questions and explain the methodological approach, including sampling, data
collection and analysis. Third, qualitative findings are reported which address the two
research questions. In the final section, we discuss the implications of the findings,
followed by a discussion of limitations and further research.

Literature review
The globalized apparel industry and New Zealand case
To study international outsourcing in the context of globalization, the apparel industry
is recommended to be an ideal platform (Abecassis-Moedas, 2007). Over the past two
decades, apparel manufacturers in the developed countries faced direct and increasing
competition from the cheap imports flooding into their home markets, resulting from
deregulation and removal of trade barriers (Puig et al., 2009). Since labor accounts for up
to 50 percent of the final cost of a garment (Lin et al., 2002), domestic apparel
manufacturers have generally adopted a new strategic pattern relocating their
production offshore for the purpose of cost reduction (Berra et al., 1995). At the same
time, they focus on core competencies and retain high value-added activities, such as
design and marketing, at home (Cho and Kang, 2001; Kumar and Arbi, 2008). The
ongoing shift of production overseas from developed countries led to the decline of
domestic industry infrastructure and shortage of skilled workers in the apparel industry
(Bailey-Todd et al., 2008), which in turn, has further pushed firms to relocate offshore.
 IJLM In contrast, the apparel industry in the developing countries has significantly upgraded
22,3 in terms of equipment and advanced knowledge and skills (Gereffi, 1999). This
facilitates the achievement of higher performance in aspects such as efficiency and
quality (Cho and Kang, 2001). As a result of these developments and evolving changes,
a global commodity chain was formed in the apparel industry worldwide through the
1980s and 1990s (Gereffi, 1999). This chain is driven by three types of buyers based
Downloaded by UNIVERSITY OF INTERNATIONAL BUSINESS AND ECONOMICS At 18:39 19 September 2016 (PT)

308 mostly in the developed countries (retailers, marketers and branded manufacturers),
with supplier factories being located in emerging economies, such as China.
As far as New Zealand is concerned, its manufacturing sector in general experienced
a dramatic change since the nations political and economic reform in 1984 (Evans et al.,
1996). Along with the countrys transformation from a highly regulated economy to one
of the most open market economies amongst the OECD countries (Chetty, 1999),
the apparel industry, which largely comprised small firms and was one of the most
protected industries, was severely hit, and witnessed a huge decline in the number of
manufacturers. For example, many small and micro firms that were known as Cut, Make
and Trim, and which acted purely as contractors to other local manufacturers (Hunt,
1995) could no longer sustain their businesses, due to cost disadvantages. Up to today,
most firms that survived have attempted to integrate into the global commodity chain
by relocating production offshore via international outsourcing (Yu and Lindsay, 2006).
They retain production unit at home, and in the meantime play an increasing role as
buyers in the global commodity chain.

International outsourcing and its impact on firms

Despite having no universally agreed definition, the essence of outsourcing generally lies
in the disintegration or disaggregation of firms value-adding activities to third parties
(Varadarajan, 2009). A fundamental objective for firms to be engaged in outsourcing
is to gain competitive advantage by producing effectively and efficiently through
outside suppliers (Lankford and Parsa, 1999). However, since it is the outsourcing
decision making that has attracted the most attention from early researchers, both the
impact of outsourcing, and the international dimension of outsourcing are relatively
under-researched ( Jiang et al., 2006). According to Gilley and Rasheed (2000),
for instance, the early literature regarding this issue was largely theoretical and relied
mostly on anecdotal evidence.
A number of studies have emerged in the last decade to address this under-researched
issue, especially with regard to international outsourcing. These studies examine the
impact of outsourcing from a number of angles. One group of scholars attempts to
establish the linkage between international outsourcing and firm performance. Using
various performance measures, including cost reduction, profitability, market share,
sales growth, their empirical results however, often fail to produce consistent results.
For example, Gorg and Hanley (2004) and Jiang et al. (2006) found that international
outsourcing may improve firms cost-efficiency, but not necessarily productivity and
profitability. Hence, attention appears to be drawn to such organizational moderators as
firms maturity, size (Gorg and Hanley, 2004) and ownership (Salimath et al., 2008). More
recently, the literature shows increasing scholarly concern with the non-financial
consequences of international outsourcing, such as in relation to firms organizational
capabilities, because they are more strategic and profound than those contemporary
performance measures (Agndal and Nordin, 2009). For instance, Fiser et al. (2008)
 describe the learning curve improvements that firms may experience over time. Singh New Zealand
(2009) and Bustinza et al. (2010) explore how outsourcing may enhance firms dynamic apparel firms
capabilities, a concept initially developed by strategists from the resource-based view
(Teece et al., 1997).
In the field of operations management, research has reported complex effects of
international outsourcing on four manufacturing dimensions of firms (cost, quality,
Downloaded by UNIVERSITY OF INTERNATIONAL BUSINESS AND ECONOMICS At 18:39 19 September 2016 (PT)

flexibility and delivery), which are also sometimes described as operational effects[1] 309
(Gupta and Zhender, 1994). Manufacturing strategy scholars believe that firms
competencies or capabilities in these four dimensions directly contribute their
manufacturing performance in the market (Skinner, 1969). Specifically, it is found that
through offshore production, firms are able to exploit lower labor costs, which allows
them to achieve cost reduction (Varadarajan, 2009). Yet, despite this so-called
operational advantage, firms are warned of other emerging costs arising from such
aspects as coordination and transportation in international outsourcing (Lankford and
Parsa, 1999). For instance, quality remains a controversial topic for international
outsourcing. On one hand, the access to better equipment and facilities in overseas
factories allows firms to ensure quality performance; on the other hand, the lack of
control over the overseas activities of the factories may cause problems (Dana et al.,
2007). In addition, research shows that although quality should be regarded as
the priority in outsourcing (Kakabadse and Kakabadse, 2002), it may sometimes be
overlooked by firms when making outsourcing decisions (Gray et al., 2009). This,
arguably, implies a negative consequence of international outsourcing with respect to
quality. Moreover, firms engaged in international outsourcing encounter longer lead
times as they often have to rely on geographically distant third party suppliers
(Dana et al., 2007; Kumar and Arbi, 2008). Even though it is still debatable whether long
lead times will necessarily result in poor delivery performance (Szwejczewski et al.,
1997), firms are expected to be aware of this in practice (Ernst et al., 2007). Research on
flexibility in the international outsourcing literature appears to be limited. A general
concern however, is that firms reliant on international outsourcing may have to tolerate
less flexibility in production due to their limited control over the third party suppliers.
For instance, Dana et al. (2007) argue that due to the constraint in flexibility, many
New Zealand apparel firms decide to retain their domestic production other than
completely rely on international outsourcing.

Manufacturing strategy theory

Manufacturing strategy theory is a popular domain in the operations management
literature. It was initially presented by Skinner (1969) and then developed by many other
management scholars (Hayes and Wheelwright, 1985; Hill, 1987) who describe the
theory as a missing link complementary to corporate strategy and business strategy
(Wheelwright, 1984). Essentially, the theory suggests that firms need to exploit certain
properties of the manufacturing function as competitive weapon. These properties refer
to the four dimensions highlighted earlier. According to Hayes and Wheelwright (1985),
manufacturing strategy can, therefore, be viewed as a pattern of decision-making
activities that determines strategic capabilities of a manufacturer.
An important notion in manufacturing strategy theory is that the four manufacturing
dimensions are associated in complex ways, reflecting a conflicting, as well as
reinforcing, nature (Skinner, 1992). For instance, the dilemma between cost and quality
 IJLM is often used as a typical example (Miller, 1983). Therefore, early scholars argued that
22,3 firms should emphasize only certain, rather than all of the operational dimensions in
their competitive strategy (Slack, 1997). However, this so-called trade-off paradigm was
questioned throughout the 1980s and 1990s. Scholars call for more careful investigation
in the associations between the manufacturing dimensions (Grobler and Grubner, 2006;
Safizadeh et al., 2000; Sarmiento et al., 2007; Szwejczewski et al., 1997). It is argued that in
Downloaded by UNIVERSITY OF INTERNATIONAL BUSINESS AND ECONOMICS At 18:39 19 September 2016 (PT)

310 the fierce market, firms may have to compete on multiple rather than one or two
dimensions in order to outperform their rivals. In the meantime, scholars believe that the
rising world class manufacturing system (Collins and Schmenner, 1993) and advanced
manufacturing operations such as supply chain management (Meyer et al., 1989) enable
firms to improve the trade-offs, making competing in multiple dimensions a possible
task (Silveira, 2005).
Manufacturing strategy theory provides a useful lens to consider the complex
operational effects discussed earlier. Generally speaking, firms adopt international
outsourcing for such benefits as cost reduction (Lankford and Parsa, 1999), but
this business practice also leads to negative consequences in aspects like flexibility
and delivery. This is consistent with the conflicting nature of those manufacturing
dimensions. In such a circumstance, from manufacturing strategy point of view, firms
must find ways to improve the trade-offs and strive to achieve satisfactory performance
in multiple dimensions (Silveira, 2005). We examine this issue in the present study, and
explore firms approaches to coordinate their capabilities and policies in regard to the
four manufacturing dimensions as they strive for market success (Hill, 1987).

Research questions and methodology

The study is intended to gain a deep understanding of the impact of international
outsourcing on firms manufacturing performance. Drawing on manufacturing
strategy theory, the first broad and also fundamental research question we are
concerned with is:
RQ1. What effects does international outsourcing have on firms in regard to the
four them manufacturing dimensions?
Further, we believe that it is both theoretically and practically meaningful to
then investigate how firms deal with the trade-offs between the four dimensions in
international outsourcing, not only because it is an important managerial task of firms in
the international outsourcing context, but also it may determine firms manufacturing
performance. Hence, the second research question is:
RQ2. What managerial actions do firms undertake in response to these effects to
achieve satisfactory manufacturing performance?
These two questions are closely related and addressing them jointly may yield a more
comprehensive understanding of the international outsourcing phenomenon.
A qualitative approach was employed in this study for three main reasons. First, the
impact of international outsourcing on firms, as noted earlier, is generally unclear in the
literature, and qualitative methods are considered to be appropriate in such a situation
(Edmondson and McManus, 2007). Second, our study is concerned with process issues,
namely, effects of international outsourcing on firms and their responses to them.
According to Creswell (1994), researcher interested in process should adopt
 qualitative method. Third, qualitative data are rich and descriptive, and allow the New Zealand
researcher to understand the details and context related to the central research issue apparel firms
(Eisenhardt, 1989; Miles and Huberman, 1994).
We adopted case studies and collected the data through face-to-face, semi-structured
interviews (Creswell, 1994; Yin, 1994). Approximately 20 apparel manufacturers were
identified in New Zealand nationwide, adhering to the criterion that they were engaged
Downloaded by UNIVERSITY OF INTERNATIONAL BUSINESS AND ECONOMICS At 18:39 19 September 2016 (PT)

in international outsourcing. We excluded those manufacturers without factories 311

as they were essentially marketers rather than manufacturers (Gereffi, 1999). Six firms
eventually agreed to participate in our study (Table I for sample characteristics). These
multiple cases enabled a broader exploration of the research questions (Eisenhardt and
Graebner, 2007), and were more compelling than a single case by increasing the validity
and stability of the findings (Miles and Huberman, 1994). Our interviewees were
the owner managers and managing directors who were expected to have sufficient
knowledge about their firms operations. Each interview lasted between one and two
hours. During the interview, we asked the managers to evaluate the benefits and costs
and other effects of international outsourcing in relation to the four manufacturing
dimensions, and then followed up with questions on how they addressed the relevant
issues. We not only paid attention to firms previous and ongoing actions, but also their
plans in the near future in response to the operational effects, which according to
Langley (2009), reflects the strength of qualitative research. Arguably, those future
actions provide useful insights in firms strategic planning in regard to international
outsourcing.
All the interviews were tape-recorded, and the computer programme NVivo 7.0 was
used to assist with data analysis. We coded the data into categories including

Percentage of
Sales outsourcing in
Staff Est. turnover Main Fabric Export China by
No. number year (mil NZ$) Ownership product sourcing market quantity (%)

A 30 1982 2.5 Family Sportswear, The UK, Australia 30

business uniform, Taiwan,
seat cover Korean, and
China
B 35 1919 5 Business Apparel Germany Australia 65
partnership accessories and Asia
C 65 1994 5 Hunting 10
Family and fishing Europe and North
business clothes the USA America
D 80 1941 12 Corporate Europe Australia 40
Business wear,
partnership uniforms
E 120 1877 50 Business Outdoor Europe and Australia
partnership clothes Japan and Asia 85
F 160 1944 20 Business Menswear Europe, Australia 65
partnership (suit, shirt, South
etc.) America,
South Table I.
Africa, Asia Sample characteristics
 IJLM positive effects, negative effects, firm actions, etc. along the themes of the two
22,3 research questions, through which data reduction was achieved. While interpreting the
coded data, we focused on firm-level activities and the managers perceptions,
assumptions, prejudgement and presuppositions (Miles and Huberman, 1994). Both
within- and cross-case analysis were conducted for comprehensive understanding of
the research questions (Eisenhardt, 1989). Cross-case analysis, in particular, helped us
Downloaded by UNIVERSITY OF INTERNATIONAL BUSINESS AND ECONOMICS At 18:39 19 September 2016 (PT)

312 to avoid the danger of reaching premature and even false conclusions.

Research findings
In this section, qualitative findings are presented in two sections, in respect to the two
research questions.

Operational effects of international outsourcing

The findings showed that international outsourcing leads to complex effects on the
four manufacturing dimensions. They are reported as follows.
Cost. The significant wage difference between New Zealand and China was
frequently noted by the interviewees. According to managers, the average salary for a
New Zealand apparel worker is about $12-15 per hour, whereas a worker in China
earns only $250-300 per month. This wage difference makes international outsourcing
cost-effective for most firms in the study. For example, despite the costs of coordination
and transportation, including, for instance, sending people to oversee the production
and shipping, firms still achieved substantial cost reduction by outsourcing to China
because of the labor intensive nature of apparel manufacturing. It was generally agreed
by managers in the study that firms should be able to lower the overall cost by at least
30 percent by the international outsourcing of manufacturing. As one manager stated:
This (international outsourcing) is how people do things nowadays in the (apparel) industry.
If we dont outsource, we have to price our products two or three times higher to make profit,
in which case we cannot sell them in the market (Firm D).
Another notable cost-related initiative to outsource is firms saving on production
facilities. It was pointed out that:
Unlike those big companies, spending tens of thousands on upgrading and maintaining
machineries can be very stressful for small firms like us. By producing in China, we dont
have to do this but still have access to the worlds best (Firm E).
Quality. In the apparel industry, quality of production can be largely reliant on
machinery. The manager from Firm C, for instance, indicated that the more advanced
machinery you use, the more consistent and reliable the product quality can be. Yet,
New Zealand apparel firms are generally constrained by financial resources. As noted
above, they generally seem to be reluctant to upgrade the facilities at their workplace,
particularly given the upward trend of international outsourcing. Meanwhile, managers
admitted the unmatchable gap between their own factories and the advancement of their
Chinese counterparts in terms of machinery as twenty years difference (Firm E). This
illustrates how international outsourcing might enhance the quality performance of
firms.
However, managers also raised concerns about quality control in international
outsourcing, because they were unable to execute their own quality management
 practices and monitor the entire manufacturing process closely in the overseas New Zealand
factories. It was noted that: apparel firms
Quality control is always a challenging task. We try our best to follow the production process
and do everything we can. We provide them (the Chinese factories) the inspected fabrics,
require samples from them prior to the manufacturing process to ensure everything is right in
Downloaded by UNIVERSITY OF INTERNATIONAL BUSINESS AND ECONOMICS At 18:39 19 September 2016 (PT)

terms of such as color, size, design, and many other details. We also send people to the
factories frequently, especially in the peak season when we have large orders. However, 313
things can still go wrong sometimes and when you find out, it is already too late and could
cause big problems for us (Firm D).
Flexibility. Most focal firms work on orders of small quantity and customized designs
from mainly local customers, which reflects their strong focus on the domestic market.
However, international outsourcing appears to make it difficult for firms to retain this
traditional strength of flexibility in volume and variety. One manager (Firm A)
explained that:
All the Chinese factories have a minimum requirement on quantity of each design, because it
wouldnt be economic for them to produce, for instance, ten different designs and ten pieces
for each, and perhaps several different sizes.
Since firms could not pass on these orders to their overseas subcontractors, relying
on international outsourcing would force them to sacrifice flexibility. Meanwhile, it is
notable that the firms all expressed strong intentions to retain those small orders in
their product portfolio, indicating their obligation to fulfill the local needs (Firm B) as
well as wanting to retain a niche market strategy. It was further explained that:
We do not want to simply discard the made-to-measure business just because they cannot be
done via international outsourcing. First of all, we always consider ourselves as tailors who
like to serve the local community. If we dont do this, no one else would. Secondly, this type of
business still accounts for nearly 20 per cent of our revenue (Firm D).
Delivery. With regard to delivery, firms complained about the low production efficiency
they had to deal with if manufacturing in New Zealand. One manager mentioned that:
To complete a piece of garment, you need cut and trim the fabrics before putting them on the
assembly line; also, it usually needs additional work like embroidery and printing. Most
New Zealand firms do not have such complete set of equipments, but have to outsource part
of the services to other local firms. This is why traditionally people here work in clusters. But
after these years, many firms offering those supporting services shut down and it becomes
very difficult for us to organize manufacturing in New Zealand, particularly when we have a
large volume. Instead, by outsourcing in China, we can do all in one factory, which means
high production efficiency (Firm C).
From the above quote, it can be seen that international outsourcing may speed up the
production procedure, which contributes to the ultimate delivery performance. However,
the data also reveal that the focal firms generally dealt with a complicated supply chain.
A manager (Firm F) said, we source the fabrics/materials from Europe, ship them to
New Zealand for inspection before sending off again to China for production. Also, the
distribution channel for firms can be complex. It was described that:
[. . .] the products from the China factory are shipped to our New Zealand factory/warehouse
for the final-touch like inspection and packaging, before delivered to the local and foreign
retailers in such as Australia (Firm E).
 IJLM The logistics associated with apparel production and distributions are described by
22,3 managers as being very time-consuming. First, most premium quality materials are
sourced from Europe, not only because they are not available in China, but more
importantly to reflect the firms strategy for positioning their product at the top-end of
the market. Second, the Europe New Zealand supply chain has been established for a
number of years, whereas the firms outsourcing in China was relatively recent,
Downloaded by UNIVERSITY OF INTERNATIONAL BUSINESS AND ECONOMICS At 18:39 19 September 2016 (PT)

314 approximately four or five years. In other words, even though there might be alternative
suppliers in China, New Zealand firms prefer to retain their existing model for raw
material procurement. Third, firms regard material inspection prior to manufacturing
by the Chinese subcontractors as an important step for quality control. This has to be
done by our own people. Fourth, before the finished products are delivered to the end
markets, managers believed that inspection is necessary. This generally took place in
the New Zealand operation; it appears that for these firms, their domestic factory was
also the only place for conducting the final-touches, because this could not be done
satisfactorily by the outsourcing companies.
The data suggest that such relatively complex logistics may not necessarily
cause problems in terms of delivery in the domestic market, because most firms
in New Zealand operate (the logistics) in the similar way (Firm F). Nonetheless, when
competing in foreign markets firms encounter competitive disadvantages with respect
to delivery times:
We can hardly outperform the local Australian manufacturers on delivery, because they ship
the products from China to Australia directly, which saves them a lot time. We try to meet the
expectations of local customers, but it hasnt been easy for us (Firm E).

Managerial actions in response to the effects of manufacturing outsourcing

Before reporting firms activities in addressing the complex effects of outsourcing, it is
meaningful to look at the roles of the four manufacturing dimensions, as perceived by
firms. As described by one manager (Firm B):
Although we are careful not to compete on price, cost always needs to kept as low as possible.
We position ourselves in the middle to high end market, therefore quality is also crucial.
Another manager (Firm E) added that:
When international outsourcing becomes an industry norm worldwide, one can hardly
differentiate by only cost and quality because everyone else is buying from China at the similar
price and quality level [. . .] (therefore) Cost and quality allow us to survive in the market. They
are essential, but it is flexibility and delivery performance that help us to win customer orders.
These quotes indicate that, in order to remain competitive, the focal firms generally
have to pursue satisfactory, or even superior, performance in multiple dimensions of
manufacturing strategy. Although the relative importance of these dimensions may
vary, no single dimension should be ignored. Below, we identify the managerial actions
that firms undertook to address the operational effects of outsourcing to achieve
optimal manufacturing performance.
First, firms preferred smaller factories in China for outsourcing. The rationale was
provided by one manager, who noted that:
In outsourcing, every buyer wants to become the privileged customer of those Chinese
factories, so that you will be treated well and your special requests can be fulfilled.
 For instance, your orders are always given the priority for production, which means you dont New Zealand
have to wait in the queue like others; sometimes your small orders can be accepted as well.
The factory pays extra attention to the quality of your product. However, only the buyers that apparel firms
have very large order quantities can become the privileged customers, whereas New Zealand
firms are too small for that. Therefore, we tend to choose to work with small factories that
only deal with a limited number of buyers, in which case, we are important to them and dont
Downloaded by UNIVERSITY OF INTERNATIONAL BUSINESS AND ECONOMICS At 18:39 19 September 2016 (PT)

have to compete with larger buyers for resources at the workplace (Firm D).
315
Managers were fully aware of the disadvantages of using small factories, such as being
less competitive and having less experience in working with foreign buyers:
Small factories tend to be less knowledgeable and skillful. But, we are willing to offer help.
For example, we used to send technicians and workers from New Zealand to train one of our
subcontractors and helped to set up their quality control procedure subject to our standard
(Firm D).
However, as a result of the purposeful selection of these outsourcing firms
and investment in the relationships, the New Zealand firms became the privileged
customer of these small factories. Managers believed that this approach allowed them
to achieve better performance in terms of quality and flexibility, as well as shorter the
lead times.
Second, firms aimed to upgrade their logistics in order to improve their international
sales. One manager described his firms delivery operation in Australia: We prioritize
the Australian retailers and try to meet their expectation on delivery. In order not to be
disadvantaged by the local competitors, we promise delivery within a week (Firm E).
Hence, the firm had to manage frequent shipping from its New Zealand warehouse to
the Australian market. This practice was acknowledged as being costly and not
appropriate in the long run. The manager outlined a solution being considered by the firm:
The problem we have is the very low profit margin from those Australian orders, mainly due
to the shipping costs for the frequent delivery of small orders. It is okay at the beginning but
has to change if we want to really compete in this market. Now, we actually plan to purchase
a warehouse in Australia where we could ship the products directly from China for inspection
and package, before deliver to the local retailers.
In addition, the manager from Firm F described an ongoing industrial trend which could
help the New Zealand firms to reduce lead times in the future. According to this manager:
[. . .] many European mills are now moving to China. We keep an eye on this movement
because it would save a lot of time if we source the fabrics in the same market as production.
Also, Firm B was prepared to modify its current supply chain operations. As the
manager said:
[. . .] we know many other companies from the US and Europe let the Chinese factories do the
sourcing, which could save time and be more efficient. This means less control (from us) but
we like to give it a try when the time comes.
Third, two firms that were relatively large in size and with adequate resources indicated
their commitment to direct investment in China. One of the managers mentioned that:
Our business is growing very well, so is the amount for outsourcing. We have already
initiated a talk with two our subcontractors in China about setting up a joint venture.
This would allow us to further make use of Chinas labor resources, boost our capacity,
 IJLM and have more control in production. What is also important is that, we might be able to tap
the Chinese market for sales, other than simply manufacturing (Firm D).
22,3
The other manager expressed a similar view and further noted that:
Part of the problem we have to deal with is the distant logistics. But if we both produce and
sell in China, it can be solved in no time (Firm A).
Downloaded by UNIVERSITY OF INTERNATIONAL BUSINESS AND ECONOMICS At 18:39 19 September 2016 (PT)

316 In the meantime, both managers indicated that their ongoing interactions with parties
in China through their international outsourcing arrangements provided firms with the
essential knowledge, skills and confidence in carrying out these proposed business
operations.
Fourth, firms combined international outsourcing and domestic production to
achieve optimal manufacturing performance. This more sophisticated approach was
explained by the manager of Firm B, as follows:
Compared to domestic production, delivery and flexibility can always be affected more or less
in international outsourcing, regardless how you do it. The practical approach is to keep the
production unit in New Zealand for those small and urgent orders, in the meantime, take
advantage of manufacturing in China (Firm B).
According to another manager:
[. . .] this means you use international outsourcing to subsidize NZ-made, so that the overall
profit margin is still satisfactory, and customers high expectations on flexibility and delivery
can also be achieved (Firm C).
To some extent, this reflects how firms manage the trade-offs between the four
dimensions.
Finally, the data reveal that over recent few years, the firms strived to improve
manufacturing competencies of their international outsourcing partners by nurturing a
number of organizational functional areas. For instance, marketing and strategic
planning for production were emphasized. It was explained that apparel firms have
to decide the designs and quantity of garments for the coming season several months
in advance, based on feedback from retailers and advice from other industry experts.
In other words, the better firms could predict the market trend, the better they were able
to ensure more accurate volumes and varieties for manufacturing by their outsource
partner, and the better they could perform in terms of delivery and flexibility.

Discussion
With regard to the RQ1, our findings show that, although international outsourcing
offers firms opportunities to reduce production cost, improve production efficiency and
enhance quality through the use of advanced machinery, problems arise in regard to
flexibility and delivery, as well as quality control. This is consistent with previous
studies conducted in other country settings ( Jin, 2004; Kumar and Arbi, 2008), and
reflects the trade-off nature between the four manufacturing dimensions. As for the RQ2,
findings reveal that, given the fierce market competition, firms believed that they had to
pursue high-level competencies in all the four manufacturing dimensions. A series of
activities were, therefore, carried out by these firms to not only exploit the operational
advantages, but also overcome the disadvantage or negative effects from international
outsourcing. These activities or managerial actions were diverse and comprehensive,
 relating to many aspects including outsourcing partner selection, outsourcing intensity, New Zealand
outsourcing relationship management, foreign direct investment, and strategic planning apparel firms
in respect to production. These actions demonstrate how firms address the
manufacturing trade-offs in the international outsourcing setting. In addition, many
of these actions appeared to have a strong impact on firms broader strategic decisions
and organizational development. For example, the intention of investing in Australia
Downloaded by UNIVERSITY OF INTERNATIONAL BUSINESS AND ECONOMICS At 18:39 19 September 2016 (PT)

for distribution, and China for production, suggests an international outsourcing 317
internationalization sequence that is noted by other scholars (Angeli and Grimaldi,
2010; Di Gregorio et al., 2009; Mudambi and Venzin, 2010); time and effort devoted to
training small overseas factories helps firms to nurture strong business relationships,
which, as the data reveal, assist firms in establishing joint ventures in China. It is also
apparent from the data that, through international outsourcing, firms were able to
accumulate knowledge, confidence and commitment in regard to the international
markets. Based on these findings, the study advances our understanding on the primary
research issue the impact of international outsourcing on firms manufacturing
performance in two ways.
First, the managerial actions undertaken by firms in response to the complex
operational effects of international outsourcing seemingly play a moderating role in the
international outsourcing manufacturing performance linkage. This means that
firms engaged in international outsourcing encounter various effects on their four
manufacturing dimensions; however, the extent to which these effects would be
translated to firms manufacturing performance may be dependent on the managerial
actions firms undertake to deal with the conflicting nature of these four dimensions, or to
improve the trade-off outcomes. This underlines the contingent nature of the
international outsourcing performance linkage from a manufacturing strategy
perspective, which can be further shown as Figure 1.
Our framework is complementary to the extant literature. To begin with, it echoes
previous studies that shed light on a number of organizational moderators on the impact of
international outsourcing on firm performance, which include, for instance, firm size,
maturity, strategy, innovation and governance (Gilley et al., 2004; Gilley and Rasheed, 2000;
Gorg and Hanley, 2004; Salimath et al., 2008). We assume that firms characterized by those
organizational factors are likely to undertake different managerial actions in response to
business issues associated with outsourcing, as a result of their distinctive resource
capability (Han et al., 2008). As such, when encountering the trade-offs between the
manufacturing dimensions, larger, more mature and internationally oriented firms would
tend to act differently from their smaller, younger and domestically oriented counterparts.

Managerial actions addressing

manufacturing trade-offs in
international outsourcing

Effects of international Firms manufacturing

outsourcing on manufacturing performance in international Figure 1.
dimensions outsourcing Framework showing the
international outsourcing
Note: Performance link
 IJLM Therefore, we consider that by focusing on firms actions, rather than the organizational
22,3 characteristics that determine these actions, our framework provides a more direct view to
comprehend international outsourcing firm performance relationship.
Meanwhile, with its emphasis on firms activities, our framework suggests an
alternative approach to considering international outsourcing related issues, as well as
interpreting research findings. For instance, Gray et al. (2009) found that there is no
Downloaded by UNIVERSITY OF INTERNATIONAL BUSINESS AND ECONOMICS At 18:39 19 September 2016 (PT)

318 negative association between firms quality expectations and their propensity to
outsourcing, and they explained this result by firms overlooking on the quality issue
while making outsourcing decisions. We do not intend to debate these assumptions that
outsourcing per se relates to poor quality. Based on our framework, however, we argue
that the initiation of international outsourcing may not necessarily be impeded by
concerns about quality. Rather, firms may be concerned with addressing quality-related
problems in the post-outsourcing decision-making stage of their production. This
suggests that, while firms should examine the impact of international outsourcing on
cost reduction, quality, delivery and flexibility while making the initial business
decision to outsource, managers should adopt a dynamic approach that allows for
continuous self-assessment and adjustment processes (Kedia and Mukherjee, 2009); this
may be regarded as part of the firms evolving manufacturing strategy (Dana et al.,
2007). As identified in this study, managerial actions, such as close monitoring, careful
inspection, and developing strong relationships with the subcontractors help to facilitate
firms in reaching their objectives in regard to the four dimensions. Moreover, in a recent
New Zealand based study, Dana et al. (2007, p. 47) discovered that the apparel
manufacturers tend to retain part of their domestic production unit, as well as using
international outsourcing. They claimed that international outsourcing is not as critical
for the competitive advantage of many of these small firms. Extending their findings
to our framework, we perceive that a combined production pattern actually reflects
firms managerial actions, which are tailored to take advantage of international
outsourcing as well as balancing the relative disadvantages. As a result, through
international outsourcing and, in some cases, domestic production, firms improve their
manufacturing performance and compete effectively in both domestic and international
markets.
Second, as already indicated, scholars now differentiate between the operational
effects and strategic effects of international outsourcing (Lankford and Parsa, 1999).
Comparatively, strategic effects are drawing increasing scholarly interest because they
are thought to be more profound and offer long-term contributions to firms. For instance,
research has shown that international outsourcing could contribute firms in terms of
learning (Fiser et al., 2008), capturing new business opportunities (Angeli and Grimaldi,
2010), organizational capabilities (Bustinza et al., 2010; Singh, 2009), intercultural
capability (Ang and Inkpen, 2008) and international competitiveness (Di Gregorio et al.,
2009). Our findings show that the managerial actions addressing manufacturing effects
allow firms to nurture strategic assets and create potential for future business
development. In other words, the long-term strategic effects could emerge through
firms responses toward short-term effects. This is understandable because from a
manufacturing strategy point of view, managers in practice often are motivated to
achieve a positive outcome in the four operational dimensions (Chalos and Sung, 1998),
even though it may be accused of short-termism in international outsourcing
(Gray et al., 2009). This view corresponds with Gilley and Rasheeds (2000, p. 764)
 statement that outsourcing is not just a purchasing activity, but a strategic decision New Zealand
that has the potential to cause ripple effects throughout the entire organization. apparel firms
The implication is that that while discussing the effects of international outsourcing,
researchers might need to consider the short- and long-term effects as a more integrated
pattern, rather than contrasting them from each other.
In short, the study provides evidence of how international outsourcing provides
Downloaded by UNIVERSITY OF INTERNATIONAL BUSINESS AND ECONOMICS At 18:39 19 September 2016 (PT)

positive and negative effects on firms manufacturing dimensions, and suggests that 319
firms managerial responses and actions play an important role in determining their
manufacturing performance. These findings contribute to our understanding
of the impact of international outsourcing on firms, which according to Jiang et al.
(2006, p. 1297) remains as an unexplained puzzle, from a manufacturing strategy
perspective. Meanwhile, focusing on small- and medium-sized firms in New Zealand,
the study enriches the existing literature that mostly consists of studies based on large
MNCs (Di Gregorio et al., 2009).

Limitations and implications for further research

The study has several limitations. First, given the characteristics of the sample firms, its
findings are industry and country specific. Although it is our intention to investigate
small- and medium-sized manufacturers, further research could expand this work to
large MNCs and service providers in international outsourcing, which may help to
examine and enhance the generalizability of the findings. Second, the theoretical
underpinning of this study is that firms are primarily driven by a desire to achieve
optimal manufacturing performance in relation to the four dimensions (Chalos and
Sung, 1998; Skinner, 1969). This is drawn from the manufacturing strategy theory.
Future researcher from other theoretical background may have different views in this
regard (McIvor, 2010). We expect those studies could produce supplementary findings to
ours. Third, we are aware of other research addressing the role of firms managerial
actions in determining performance in international outsourcing. For instance,
Agndal and Nordin (2009, p. 329) write that [. . .]the negative impact of outsourcing
(on capabilities) may be mediated by managerial actions [. . .]. Because our aim in the
present study is mainly to draw attention to these actions, further investigation in this
respect is needed in future research.
Overall, international outsourcing is a popular industry phenomenon worldwide.
In this study, we investigate international outsourcing by small apparel manufacturers
in New Zealand and explore how these firms are affected by this approach
particularly in the context of their manufacturing strategy. Our findings propose the
contingency of the international outsourcing performance linkage, which further
highlights the role of firms managerial actions in response to the complex operational
effects of international outsourcing. We anticipate that this study could assist
researchers in better understanding the impact of international outsourcing on firms
operational strategy, and of how firms respond to these effects, especially from a SME
point of view.

Note
1. In this study, operational effects are discussed in the manufacturing strategy context and
pertain to the four manufacturing dimensions.
 IJLM References
22,3 Abecassis-Moedas, C. (2007), Globalisation and regionalisation in the clothing industry:
survival strategies for UK firms, International Journal of Entrepreneurship and Small
Business, Vol. 4 No. 3, pp. 291-304.
Agndal, H. and Nordin, F. (2009), Consequences of outsourcing for organizational capabilities:
Downloaded by UNIVERSITY OF INTERNATIONAL BUSINESS AND ECONOMICS At 18:39 19 September 2016 (PT)

some experiences from best practices, Benchmarking: An International Journal, Vol. 16

320 No. 3, pp. 316-34.
Ang, S. and Inkpen, A. (2008), Cultural intelligence and offshore outsourcing success:
a framework of firm-level intercultural capability, Decision Sciences, Vol. 39 No. 3,
pp. 337-58.
Angeli, F. and Grimaldi, R. (2010), Leveraging offshoring: the identification of new business
opportunities in international settings, Industry and Innovation, Vol. 17 No. 4, pp. 393-413.
Bailey-Todd, A., Eckman, M. and Tremblay, K. (2008), Evolution of the Los Angeles Country
apparel industry, Journal of Fashion Marketing and Management, Vol. 12 No. 2,
pp. 260-76.
Berra, L., Piatti, L. and Vitali, G. (1995), The internationalization process in the small and
medium sized firms: a case study on the Italian clothing industry, Small Business
Economics, Vol. 7 No. 1, pp. 67-75.
Bustinza, F., Arias-Aranda, D. and Gutierrez-Gutierrez, L. (2010), Outsourcing, competitive
capabilities and performance: an empirical study in service firms, International Journal of
Production Economics, Vol. 125 No. 2, pp. 276-88.
Chalos, P. and Sung, J. (1998), Outsourcing decisions and managerial incentives,
Decision Sciences, Vol. 29 No. 4, pp. 901-19.
Chetty, K. (1999), Dimensions of internationalisation of manufacturing firms in the apparel
industry, European Journal of Marketing, Vol. 33 No. 2, pp. 121-42.
Cho, J. and Kang, J. (2001), Benefits and challenges of global sourcing: perceptions of US apparel
retail firms, International Marketing Review, Vol. 18 No. 5, pp. 542-61.
Collins, S. and Schmenner, W. (1993), Achieving rigid flexibility: factory focus for the 1990s,
European Management Journal, Vol. 11 No. 3, pp. 443-7.
Creswell, W. (1994), Research Design: Qualitative and Quantitative Approaches, Sage,
Thousand Oaks, CA.
Dana, P., Hamilton, T. and Pauwels, B. (2007), Evaluating offshore and domestic production in
the apparel industry: the small firms perspective, Journal of International
Entrepreneurship, Vol. 5 No. 1, pp. 47-63.
Di Gregorio, D., Musteen, M. and Thomas, E. (2009), Offshore outsourcing as a source of
international competitiveness for SMEs, Journal of International Business Studies, Vol. 40
No. 6, pp. 969-88.
Edmondson, A.C. and McManus, S.E. (2007), Methodological fit in management fit research,
Academy of Management Review, Vol. 32 No. 4, pp. 1155-79.
Eisenhardt, K.M. (1989), Building theories from case study research, Academy of Management
Review, Vol. 14 No. 4, pp. 523-50.
Eisenhardt, K.M. and Graebner, M.E. (2007), Theory building from cases: opportunities and
challenges, Academy of Management Journal, Vol. 50 No. 1, pp. 25-32.
Ernst, R., Kamrad, B. and Ord, K. (2007), Delivery performance in vendor selection decisions,
European Journal of Operational Research, Vol. 176 No. 3, pp. 534-41.
 Evans, L., Grimes, A., Wilkinson, B. and Teece, D. (1996), Economic reform in New Zealand New Zealand
1984-95: the pursuit of efficiency, Journal of Economic Literature, Vol. 34 No. 7,
pp. 1856-902. apparel firms
Fiser, J., Hirschheim, R. and Jacobs, R. (2008), Understanding the outsourcing learning curve:
a longitudinal analysis of a large Australian company, Information System Frontiers,
Vol. 10 No. 2, pp. 165-78.
Downloaded by UNIVERSITY OF INTERNATIONAL BUSINESS AND ECONOMICS At 18:39 19 September 2016 (PT)

Gereffi, G. (1999), International trade and industrial upgrading in the apparel commodity chain, 321
Journal of International Economics, Vol. 48 No. 1, pp. 37-70.
Gilley, M. and Rasheed, A. (2000), Making more by doing less: an analysis of outsourcing and its
effects on firm performance, Journal of Management, Vol. 26 No. 4, pp. 763-90.
Gilley, M., McGee, F. and Rasheed, A. (2004), Perceived environmental dynamism and
managerial risk aversion as antecedents of manufacturing outsourcing: the moderating
effects of firm maturity, Journal of Small Business Management, Vol. 42 No. 2, pp. 117-33.
Gorg, H. and Hanley, A. (2004), Does outsourcing increase profitability?, The Economic and
Social Review, Vol. 35 No. 3, pp. 267-88.
Gray, J.V., Roth, V. and Tomlin, B. (2009), The influence of cost and quality priorities on the
propensity to outsource production, Decision Sciences, Vol. 49 No. 4, pp. 697-726.
Grobler, A. and Grubner, A. (2006), An empirical model of the relationships between
manufacturing capabilities, International Journal of Operations & Production
Management, Vol. 26 No. 5, pp. 458-86.
Gupta, M. and Zhender, D. (1994), Outsourcing and its impact on operations strategy,
Production & Inventory Management Journal, Vol. 35 No. 3, pp. 70-5.
Han, H., Lee, J. and Seo, Y. (2008), Analyzing the impact of a firms capability on outsourcing
success: a process perspective, Information & Management, Vol. 45 No. 1, pp. 31-42.
Hayes, H. and Wheelwright, C. (1985), Restoring Our Competitive Edge: Competing through
Manufacturing, Wiley, New York, NY.
Hill, T.J. (1987), Teaching manufacturing strategy, International Journal of Operations
& Production Management, Vol. 6 No. 3, pp. 10-20.
Hunt, J. (1995), Human resource strategies in the New Zealand clothing manufacturing
industry, New Zealand Journal of Industrial Relations, Vol. 20 No. 2, pp. 171-81.
Jiang, B., Frazier, V. and Prater, E.L. (2006), Outsourcing effects on firms operational
performance: an empirical study, International Journal of Operations & Production
Management, Vol. 26 No. 12, pp. 1280-300.
Jin, B. (2004), Achieving an optimal global versus domestic sourcing balance under demand
uncertainty, International Journal of Operations & Production Management, Vol. 24
No. 12, pp. 1292-305.
Kakabadse, A. and Kakabadse, N. (2002), Trends in outsourcing: contrasting USA and Europe,
European Management Journal, Vol. 20 No. 2, pp. 189-98.
Kedia, B.L. and Mukherjee, D. (2009), Understanding offshoring: a research framework based on
disintegration, location and externalization advantages, Journal of World Business, Vol. 44
No. 3, pp. 250-61.
Kumar, S. and Arbi, S. (2008), Outsourcing strategies for apparel manufacture: a case study,
Journal of Manufacturing Technology Management, Vol. 19 No. 1, pp. 73-91.
Langley, A. (2009), Studying processes in and around organizations, in Buchanan, D. and
Bryman, A. (Eds), Sage Handbook of Organizational Research Methods, Sage,
Thousands Oaks, CA, pp. 409-29.
 IJLM Lankford, M. and Parsa, F. (1999), Outsourcing: a primer, Management Decision, Vol. 37 No. 4,
pp. 310-16.
22,3
Lin, S., Moore, A., Kincade, H. and Avery, C. (2002), Dimensions of apparel manufacturing
strategy and production management, International Journal of Clothing Science
& Technology, Vol. 14 No. 1, pp. 46-60.
Downloaded by UNIVERSITY OF INTERNATIONAL BUSINESS AND ECONOMICS At 18:39 19 September 2016 (PT)

McIvor, R. (2010), The influence of capability considerations on the outsourcing decision:

322 the case of a manufacturing company, International Journal of Production Research,
Vol. 48 No. 17, pp. 5031-52.
Meyer, A., Nakane, J., Miller, G. and Ferdows, K. (1989), Flexibility: the next competitive battle
the manufacturing futures survey, Strategic Management Journal, Vol. 10 No. 2,
pp. 135-44.
Miles, M.B. and Huberman, A.M. (1994), Qualitative Data Analysis: An Expanded Source Book,
2nd ed., Sage, Thousand Oaks, CA.
Miller, S.S. (1983), Make your plant managers job manageable, Harvard Business Review,
Vol. 61 No. 1, pp. 69-74.
Mudambi, R. and Venzin, M. (2010), The strategic nexus of offshoring and outsourcing
decisions, Journal of Management Studies, Vol. 47 No. 8, pp. 1510-33.
Puig, F., Marques, H. and Ghauri, N. (2009), Globalization and its impact on operational
decisions: the role of industrial districts in the textile industry, International Journal of
Operations & Production Management, Vol. 29 No. 7, pp. 692-719.
Safizadeh, H., Ritzman, P. and Mallick, D. (2000), Revisiting alternative theoretical paradigms in
manufacturing strategy, Production and Operations Management, Vol. 9 No. 2, pp. 111-27.
Salimath, S., Cullen, B. and Umesh, N. (2008), Outsourcing and performance in entrepreneurial
firms: contingent relationship with entrepreneurial configurations, Decision Sciences,
Vol. 39 No. 3, pp. 359-80.
Sarmiento, R., Byrne, M., Contreras, R. and Rich, N. (2007), Delivery reliability, manufacturing
capabilities and new models of manufacturing efficiency, Journal of Manufacturing
Technology Management, Vol. 18 No. 4, pp. 367-86.
Sen, A. and Haq, K. (2010), Internationalization of SMEs: opportunities and limitations in the
age of globalization, International Business & Economics Research Journal, Vol. 9 No. 5,
pp. 135-42.
Silveira, G.J. (2005), Improving trade-offs in manufacturing: method and illustration,
International Journal of Production Economics, Vol. 95 No. 1, pp. 27-38.
Singh, S. (2009), How market orientation and outsourcing create capability and impact business
performance, Thurnderbird International Business Review, Vol. 51 No. 5, pp. 457-71.
Skinner, W. (1969), Manufacturing missing link in corporate strategy, Harvard Business
Review, May/June, pp. 136-45.
Skinner, W. (1992), Missing the links in manufacturing strategy, in Voss, C. (Ed.),
Manufacturing Strategy: Process and Content, Chapman & Hall, London, pp. 15-25.
Slack, N. (1997), Trade-offs, in Slack, N. (Ed.), Blackwell Encyclopaedic Dictionary of Operations
Management, Blackwell, Cambridge, MA, pp. 227-8.
Szwejczewski, M., Mapes, J. and New, C. (1997), Delivery and trade-offs, International Journal
of Production Economics, Vol. 53 No. 4, pp. 323-30.
Teece, J., Pisano, G. and Shuen, A. (1997), Dynamic capabilities and strategic management,
Strategic Management Journal, Vol. 18 No. 7, pp. 509-33.
 Varadarajan, R. (2009), Outsourcing: think more expansively, Journal of Business Research, New Zealand
Vol. 62 No. 11, pp. 1165-72.
Wheelwright, S.C. (1984), Manufacturing strategy: defining the missing link, Strategic
apparel firms
Management Journal, Vol. 5 No. 1, pp. 77-92.
Yin, R.K. (1994), Case Study Research: Design and Methods, 2nd ed., Sage, Thousand Oaks, CA.
Downloaded by UNIVERSITY OF INTERNATIONAL BUSINESS AND ECONOMICS At 18:39 19 September 2016 (PT)

Yu, Y. and Lindsay, V. (2006), Manufacturing strategy of New Zealand apparel manufacturers,
unpublished Masters thesis, Victoria University of Wellington, Wellington. 323
Further reading
Gereffi, G., Humphrey, J. and Sturgeon, T. (2005), The governance of global value chains,
Review of International Political Economy, Vol. 12 No. 1, pp. 78-104.

About the authors

Yang Yu (PhD, Victoria University of Wellington) is a Lecturer in the School of Marketing and
International Business at Victoria University of Wellington, New Zealand. His research interests
include outsourcing and internationalisation of SMEs, and business relationship development of
foreign firms operating in China. Yang Yu is the corresponding author and can be contacted at:
yang.yu@vuw.ac.nz
Valerie Lindsay (PhD, Warwick) is an Associate Professor in International Business
in the School of Marketing and International Business at Victoria University of Wellington,
New Zealand. Her research interests include internationalisation of SMEs, services
internationalisation and SME market entry into Asia.

To purchase reprints of this article please e-mail: reprints@emeraldinsight.com

Or visit our web site for further details: www.emeraldinsight.com/reprints
 This article has been cited by:

1. Shaheen Sardar, Young Lee, Muhammad Memon. 2016. A Sustainable Outsourcing Strategy Regarding
Cost, Capacity Flexibility, and Risk in a Textile Supply Chain. Sustainability 8:3, 234. [CrossRef]
2. G.N. Kenyon, M.J. Meixell, P.H. Westfall. 2016. Production outsourcing and operational performance:
An empirical study using secondary data. International Journal of Production Economics 171, 336-349.
[CrossRef]
Downloaded by UNIVERSITY OF INTERNATIONAL BUSINESS AND ECONOMICS At 18:39 19 September 2016 (PT)

3. Federico Caniato, Luca Crippa, Margherita Pero, Andrea Sianesi, Gianluca Spina. 2015.
Internationalisation and outsourcing of operations and product development in the fashion industry.
Production Planning & Control 26:9, 706-722. [CrossRef]
4. Shaheen Sardar, Young Hae Lee. 2015. Analysis of Product Complexity considering Disruption Cost in
Fast Fashion Supply Chain. Mathematical Problems in Engineering 2015, 1-15. [CrossRef]
5. Seyed Hamed MoosaviRad Sustainable Manufacturing and Life Cycle Engineering Research Group,
School of Mechanical and Manufacturing Engineering, The University of New South Wales, Sydney,
Australia Sami Kara Sustainable Manufacturing and Life Cycle Engineering Research Group, School of
Mechanical and Manufacturing Engineering, The University of New South Wales, Sydney, Australia
Suphunnika Ibbotson Sustainable Manufacturing and Life Cycle Engineering Research Group, School of
Mechanical and Manufacturing Engineering, The University of New South Wales, Sydney, Australia .
2014. Impact of international outsourcing on the value adding of industries. The International Journal of
Logistics Management 25:3, 463-486. [Abstract] [Full Text] [PDF]
6. Mary J. Meixell Quinnipiac University, Hamden, Connecticut, USA George N. Kenyon Lamar University,
Beaumont, Texas, USA Peter Westfall Texas Tech University, Lubbock, Texas, USA . 2014. The effects
of production outsourcing on factory cost performance: an empirical study. Journal of Manufacturing
Technology Management 25:6, 750-774. [Abstract] [Full Text] [PDF]
7. Mert TokmanDepartment of Marketing, James Madison University, Harrisonburg, Virginia, USA R.
Glenn Richey JrDepartment of Management and Marketing, The University of Alabama, Tuscaloosa,
Alabama, USA Tyler R. MorganDepartment of Management and Marketing, The University of Alabama,
Tuscaloosa, Alabama, USA Louis MarinoDepartment of Management and Marketing, The University of
Alabama, Tuscaloosa, Alabama, USA Pat H. DicksonBusiness and Accountancy, Wake Forest University,
Winston Salem, North Carolina, USA. 2013. SME supply chain portfolios: firm satisfaction and
organization resources. The International Journal of Logistics Management 24:2, 271-300. [Abstract] [Full
Text] [PDF]
8. Barry BrewerDepartment of Management & Marketing, College of Business, University of Wyoming,
Laramie, Wyoming, USA Bryan AshenbaumDepartment of Management, The Richard T. Farmer School
of Business, Miami University, Oxford, Ohio, USA Jeffrey A. OgdenOperational Sciences Department,
Air Force Institute of Technology, WrightPatterson AFB, Ohio, USA. 2013. Connecting strategylinked
outsourcing approaches and expected performance. International Journal of Physical Distribution & Logistics
Management 43:3, 176-204. [Abstract] [Full Text] [PDF]
9. S. H. MoosaviRad, S. Kara, S. IbbotsonOutsourcing decisions and environmental sustainability
1494-1499. [CrossRef]
10. Patrick J. MurphyDriehaus College of Business, DePaul University, Chicago, Illinois, USA Zhaohui
WuCollege of Business, Oregon State University, Corvallis, Oregon, USA Harold WelschDriehaus
College of Business, DePaul University, Chicago, Illinois, USA Daniel R. HeiserDriehaus College
of Business, DePaul University, Chicago, Illinois, USA Scott T. YoungDriehaus College of Business,
 DePaul University, Chicago, Illinois, USA Bin JiangDriehaus College of Business, DePaul University,
Chicago, Illinois, USA. 2012. Small firm entrepreneurial outsourcing: traditional problems, nontraditional
solutions. Strategic Outsourcing: An International Journal 5:3, 248-275. [Abstract] [Full Text] [PDF]
Downloaded by UNIVERSITY OF INTERNATIONAL BUSINESS AND ECONOMICS At 18:39 19 September 2016 (PT)