Relocating Low-to-Medium Tech Manufacturing Activities to Developing Countries: Empirical Analysis of Taiwanese and South Korean Manufacturing Outsourcing to Bangladesh

Transnational Corporations Review Volume 5, Number 2 June 2013 www.tnc-online.net [e-mail]

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Relocating Low-to-Medium Tech Manufacturing Activities to Developing Countries: Empirical Analysis of Taiwanese and South Korean Manufacturing Outsourcing to Bangladesh
Md. Mamunur Rashid1and Md. Samim Al-Azad2

Abstract: The aim of this study is to examine the objectives and factors influencing the offshore outsourcing decision of manufacturing firms from emerging countries to developing countries like Bangladesh. The theoretical framework is developed with three categories of factors namely reduce operating cost, improve company focus, and access to world class capability. This is an exploratory study based on survey method. The data collected through a survey questionnaires from a total of 227 Taiwanese (131) and Korean manufacturing firms (96) operating in Bangladesh. The findings are analyzed using a statistical software package (SPSS). The main tools used are factor analysis, correlation analysis and linear regression analysis. The findings reveal that some factors like capital investment, fixed cost, entering new (third) markets, and access to local capabilities, invention and innovation influence Taiwanese and Korean low and mid-tech manufacturing firm’s outsourcing decision to low labor cost country like Bangladesh with preferential access to the developed country markets for manufacturing goods. Keywords: Offshore outsourcing, manufacturing firms, exploratory approach, developing country

1. Introduction
Development of technologies and worldwide reduction of trade barriers during the last decades have increased competition and the need to offer high-quality products and services for a reasonable price. Particularly, in order to be competitive in the world market, offshore outsourcing of manufacturing functions can be a valuable tool if handle in the right way (Ehie, 2001). With the opportunity of free market context, firms are

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Executive Survey: The Outsourcing Institute 's Annual Survey of Outsourcing End-user. www.outsourcing.com/content.asp?page=01b/articles/intelligence/oi top_ten_survey.html&nonav=true 28  Md. Mamunur Rashid and Md. Samim Al-Azad Uddin, G. M. (2005). The Challenges and Prospects of Effective HR Outsourcing for Managerial Activities in the Corporate World of Bangladesh, AIUB, Journal of Business and Economics, 4:91-104. Ward, S. (2004). Outsourcing Research: What is your position, Business Information Review, SAGE Publication, 21:227-239. Welch, J. and Nayak, P. (1992). Strategic Sourcing: A Progressive Approach to Make or Buy Decision, Academy of Management executive, 6 (1):23-31. About the Authors Md. Mamunur Rashid completed his MBA from Southern Taiwan University of Technology (STUT), Republic of China, (ROC), Taiwan. His research interests are on Knowledge transfer through offshore outsourcing, emerging to developing countries offshore outsourcing and cross-cultural management. He have presented his research findings in international conferences and published in peer reviewed journals including Global Journal of Strategies and Governance and the International Journal of Business and Management. Md. Samim Al-Azad is a PhD candidate of the Graduate School of Business at Seoul National University, South Korea. He worked as a Lecturer of Business School at Prime University, Bangladesh and MIS officer at BRAC dealing with projects funded by the UNDP and WHO. He has published in Journal of Global Business Administration and Global Journal of Strategies and Governance. His research interest areas are IT outsourcing, knowledge management, and electronic and mobile business. Contact Information Md. Mamunur Rashid, Email: [e-mail]. Md. Samim Al-Azad, Email: [e-mail]. 29