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OUTSOURCING, OFFSHORING AND THE GLOBAL FACTORY
Roger Strange and Giovanna Magnani
Introduction
Outsourcing and offshoring are terms that are often used interchangeably, yet they refer to different firm strategies and have different motivations. Outsourcing1 refers to the procurement by lead firms2 of goods and/or services from independent outside suppliers, when those goods and services had previously been provided internally within the firm. Outsourcing does not refer to one-off purchases, but involves the strategic decision to reject the vertical integration of an activity (Gilley & Rasheed, 2000; Grossman & Helpman, 2005). It is a process which involves the lead firm externalizing elements of its value chain,3 i.e. there is an organizational ...
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