The Impact of Distance on Offshore Business Relationships

Benoit Aubert, Suzanne Rivard and Mathieu Templier

CIRANO Working Papers from CIRANO

Abstract: Offshoring can reduce the production cost of an activity. At the same time, it can generate additional management costs. This paper develops a model explaining the main drivers of the efforts required to manage offshore activities. Results show that distance plays an important role in the determination of the effort level. However, it is not simply a cultural or geographical but a more complex notion labelled perceived distance. IT played an interesting role in the determination of effort. It facilitated a higher formalization of the information exchanged and mitigated the impact of geographical distance on the effort required. La délocalisation des activités permet parfois de réduire le coût de ces activités. En même temps, cette délocalisation génère des coûts de gestion additionnels. Cet article développe un modèle expliquant les principaux facteurs qui influencent l'effort de gestion requis pour gérer des activités à distance. Les résultats montrent que la distance a un rôle important. Toutefois, ce n'est pas simplement la distance géographique ou culturelle mais plutôt une « distance perçue » qui semble le facteur déterminant. Les technologies de l'information facilitent la formalisation de l'information échangée et réduisent l'impact de la distance sur l'effort de gestion.

Keywords: Offshoring; distance; information technology; délocalisation; distance; technologies de l'information. (search for similar items in EconPapers)
Date: 2009-03-01
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Persistent link: https://EconPapers.repec.org/RePEc:cir:cirwor:2009s-05

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