Offshoring and Organizational Innovation: The Moderating Roles of Absorptive Capacity and Inter-Functional Integration

Abstract

The paper extends previous research on the relationship between offshoring and organizational innovation. Building on prior research that suggested a curvilinear relationship between offshoring and innovation, the paper aims to increase our understanding about the relationship by introducing two moderators. It proposes that when offshoring, organizations with higher absorptive capacity are more likely to innovate than those with lower levels. Additionally, it suggests that organizations with higher levels of inter-functional integration are expected to benefit more from offshoring than those with lower levels. The paper concludes with discussions on managerial implications as well as areas for future research.