Academic journal article Journal of International Business Research

The Impact of Offshoring on Organizational Commitment: Recruiting, Training, Retention and Ethical Concerns

Academic journal article Journal of International Business Research

The Impact of Offshoring on Organizational Commitment: Recruiting, Training, Retention and Ethical Concerns

Article excerpt

INTRODUCTION

The practice of "offshoring," i.e. relocating jobs from a metropolitan location such as the United States to other nations for purposes of extracting arbitrage advantages in the labor sector, began in manufacturing (Houseman, 2007), but has now set up pervasive roots throughout the service sector (Crinò, 2010) and even in the knowledge-intensive parts of industry (Leonardi & Bailey, 2008). The debate on the broader consequences of such offshoring rages on in the business press (Engardio & Einhorn, 2005), consultant publications (Farrell & Agrawal, 2003), and increasingly, journals devoted to managerial practice (Arik, 2013; Venkataraman, 2004) and organizational theory (Levy, 2005). At the heart of this debate lies unease about the transforming relationship between employees and organizations, another topic that has been subject to extensive research in the organizational literature (Denning, 2013; Messner, 2013; Janssen & Van Yperen, 2004; Tsui, Pearce, Porter & Tripoli, 1997; Mir, 1997). As organizations continue to attempt to socialize their employees into subjecthood (Louis, 1980), issues of employee-organization relations become salient. While research has indicated that employees experience both economic and social pulls toward their organizations (Arthur, 1992), theorists have often wondered which of these pulls is more compelling in the current organizational scenario. On one hand, the employee-organization relationship can be highly economic in nature, and resemble a market transaction (Williamson, 1985). On the other hand, there exists a psychological contract between employees and organizations, one that goes way beyond market transactions (Rousseau, 1995). The framework of social exchange theory (Blau, 1964) has been used to provide a theoretical basis for this relationship, and empirical examinations of this issue have concluded that the mutuality of investment in this relationship is the greatest determinant of the strength and success of the employee-organization relationship (Moss, Sanchez & Heisler, 2004; Tsui et. al., 1997).

In this paper, we argue that in the current corporate landscape, the employee-organization relationship is subjected to further shifts on account of the changing profile of the workforce. Because of offshoring and corporate downsizing, today's employees often operate in an environment where their work group is comprised of a number of traditional workers employed directly by the organization as well as a number of contracted workers drawn from different organizations, put together in order to work on a specific project. The former provide the stability and organization-specific expertise while the latter provide both functional and numerical flexibility to the organization. Often, the group starts working on projects as soon as it is formed. Also, the nature and size of the group tends to be dynamic with the post-offshoring employees being added and removed as the need dictates. As a result, the "post-offshoring worker," including the worker who is attempting to enter the workforce in the next few years, encounters an atmosphere characterized by a paradoxical combination of high hopes and declining trust. In the wake of waves of corporate downsizing (Beam, 1997), most of which have been triggered not by falling productivity but more by the exigencies of the stock market (Lowe, 1998), workers are justifiably wary of their expectations from their employers. To that extent, we may hypothesize that their relationship with their employers is moving from a psychological contract model to an economic exchange model.

How do we reconcile the ambivalence of the post-offshoring workers toward their employers with their intense need to monitor their own progress? Does this attitude on the part of the post-offshoring workers constitute a fundamental shift? Does it pose an HR challenge? How can such a challenge be met by practicing human resource managers? …

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