Offshoring and outsourcing of core corporate activities: The global relocation of pharmaceutical industry clinical trials

This dissertation examines the offshoring and outsourcing of core activities in the pharmaceutical industry. Using primary and secondary data sources, the dissertation adopts a multi-level approach to examine four research questions related to the sourcing strategies of core activities such as clinical trials. Specifically, I look at operational and strategic factors that influence the decision to relocate core activities both organizationally (in-house versus external vendors) and geographically (activities conducted in home nation versus trials in foreign countries). Drawing on Dunning's framework, the dissertation next examines the role of four motives (resource, market, efficiency and strategic asset seeking) in the offshoring decisions while distinguishing between offshore outsourcing and offshoring to foreign affiliates. Using multiple case studies, the third study further investigates the evolution of firms sourcing strategies from conducting core activities in-house to increasingly outsourcing and offshoring them. The final study in the dissertation examines the impact of offshoring and outsourcing on the performance of core activities.;Data for this dissertation comes from multiple sources: Primary data from in-depth structured interviews and online survey of vice presidents of clinical affairs of pharmaceutical and biotechnology firms, as well as secondary data from Medidata, Orbis, and World Development Indicators.;The dissertation offers evidence that firms tend to use different sourcing strategies for different motives. Specifically, offshoring to foreign affiliates is primarily driven by strategic factors and firms tend to prefer this strategy for strategic asset seeking purposes. Offshore outsourcing on the other hand is motivated by resource and efficiency seeking behavior and the important determinants for this strategy are mainly operational. The third type of sourcing strategy is domestic outsourcing and firms are driven by both strategic as well as operational determinants for this strategy. The qualitative study on strategy evolution points towards a five stage process which begins with in-house sourcing followed by domestic outsourcing, foreign affiliates, offshore outsourcing and finally backsourcing of core activities. Evidence from the dissertation suggests that outsourcing has a positive impact on performance when compared to in-house while offshoring has a negative impact compared to domestic sourcing.