Organizational adaptation in offshoring: the relative performance of home- and host-based learning strategies

Offshoring offers managers the promise of substantial economic benefits, but also comes with the risk of increased complexity and coordination challenges. We argue that offshoring firms must accumulate architectural knowledge to keep the cost of coordination of the geographically separated activities at bay. Based on a simulation model that examines the performance implications of firms’ learning strategies when offshoring, we show that such knowledge accumulation can be achieved through either a home-based or a host-based learning strategy.