From Efficiency to Growth Strategy Along the Global Value Chains

Offshore outsourcing has been considered a low cost production site. There is rare studies that addressed the offshore outsourcing strategy as a growth strategy where offshoring focal firm can develop their capabilities for competitive advantage. This paper explores how SMEs enhance their dynamic capabilities by entering into offshore outsourcing relationships. The dynamic capabilities development process includes increasing focus on the Core competency, developing innovation capabilities, increasing market share in existing and/or new markets, and improving its flexibility to face the dynamic business ecosystem. This exploratory case study on ten manufacturing SMEs from Quebec (Canada) shows that offshore outsourcing contributes to developing dynamic capabilities with varying degrees of success. It shows an evolutionary path of the dynamic capability development process. Managers can enhance their understanding on how offshoring can enable firms to improve their dynamic capabilities to face challenging business eco-system and remain competitive in the high cost countries (HCC).