Exploring layers of complexity in offshoring research and practice

Abstract

In just a matter of a decade, the Danish healthcare product manufacturer Coloplast underwent a complete organizational reconfiguration from being a local Danish manufacturing company to become a truly multinational corporation. Beginning in 2001, Coloplast commenced the process of relocating major parts of its manufacturing activities away from Denmark to Tatabanya in Hungary. Ten years later, the company had relocated up to almost 90 of the production mainly to Hungary and China, but also to France and the United States. This reconfiguration had given substantial benefits, such as access to lower labor and production costs, but also an important means to reduce redundant organizational layers and resources. However, a transformation of this caliber rarely comes without challenges. In particular, Coloplast experienced many challenges such as empowering the new subsidiaries, adjusting the organizational requirements and identifying the detrimental organizational complexities. As Coloplast's Operations Manager Allan Rasmussen explained: “We had designed an organizational structure that was too complex, with complex decision processes, complex governance structure, and complex communication channels”.