Offshoring in the New Global Political Economy

This essay challenges claims by economists and management scholars that ‘offshoring’ is simply another form of trade with mutual benefits. I argue that reducing wages through offshoring leads to wealth creation for shareholders but not necessarily for countries and employees, and that many displaced...

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Bibliographic Details
Published inJournal of management studies Vol. 42; no. 3; pp. 685 - 693
Main Author Levy, David L.
Format Journal Article
LanguageEnglish
Published Oxford, UK Blackwell Publishing Ltd 01.05.2005
Wiley Blackwell
SeriesJournal of Management Studies
Subjects
Commodity market
Globalization
Job loss
Labour market
Labour mobility
Location of enterprises
Management science
Manycountries
Offshoring
Organization theory
Outsourcing
Political economy
Skilled workers
Wages & salaries
Wealth
World economy
United States > US
India
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Summary:This essay challenges claims by economists and management scholars that ‘offshoring’ is simply another form of trade with mutual benefits. I argue that reducing wages through offshoring leads to wealth creation for shareholders but not necessarily for countries and employees, and that many displaced workers have difficulty ‘trading up’ to higher skilled jobs. Offshoring is a new phenomenon that entails the organizational and technological ability to relocate specific tasks and coordinate a geographically dispersed network of activities. It decouples the linkages between economic value creation and geographic location. The result is the creation of global commodity markets for particular skills and a shift in the balance of market power among firms, workers, and countries.
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ISSN:0022-2380
1467-6486
DOI:10.1111/j.1467-6486.2005.00514.x