Organizational Learning and Capabilities for Onshore and Offshore Business Process Outsourcing

This paper identifies and analyzes firm-level characteristics that facilitate onshore and offshore business process outsourcing (BPO). We use organizational learning and capabilities to develop a conceptual model. We test the conceptual model with archival data on a broad cross section of U.S. firms. Our empirical findings indicate that firms with experience in onshore information technology (IT) outsourcing and capabilities related to IT coordination applications and process codification are more likely to engage in BPO, and firms with experience in internationalization are more likely to engage in offshore BPO. We also find that IT coordination applications have a greater impact on onshore BPO than on offshore BPO, and the effect of process codification is partly mediated through IT outsourcing.