The Analysis On The Effect Of Undertaking International Outsourcing On Company Performance

With the development of economic globalization and industrial division, outsourcing has become a far more important choice of management strategy for many transnational corporations. From the traditional "World Factory" for production outsourcing to the gradually improvement of undertaking service outsourcing, Chinese companies have the pursuit of quality improvement, not only pay more attention to quantity expansion. For one side, many processors in coastal and border regions of our country are now making efforts in attracting outside investment. And for another, many excellent demonstration enterprises have emerged in the field of service outsourcing. They cover information technology outsourcing, business process outsourcing and knowledge process outsourcing with their global business operations.Transnational outsourcing production is mainly based on the theory of economic globalization, the international division of labor theory, value chain theory and national competitive advantage theory. After analyzing the basic theories and researches of undertaking transnational outsourcing, the author found that the impact of undertake transnational outsourcing for the host country is a popular area of research, but those researches are often based on a macro level as well as the perspective of enterprise is less; At the same time, the studies of technological spillover effect of outsourcing in China is also a hotspot research area in recent years, but most studies focus on examining whether the technology spillover exists and its ways to play a role, also without the perspective of enterprise. I think that, outsource or not is an enterprise strategic decision and the choice of outsourcing is based on the benefit they can get from it, so I believe that this paper has both theoretical significance and practical significance to our enterprises.From the perspective of enterprises, my research concentrates on the business performance of our country enterprises which undertake transnational outsourcing. Specifically, we talk about whether the influence of the transnational outsourcing project can bring economic benefits to the enterprise. By using the CSMAR database, we make an analysis of electronic information industry, communications industry, mechanical industry and electronic components industry. And we divide Business performance into the financial indicators and non-financial indicators.This paper is divided into six chapters.The first chapter is the introduction, which introduces the research background, research methods, and the structure of the paper, main innovation and shortcomings.The second chapter describes the study theories on international outsourcing. In this chapter, we first define the concepts of outsourcing, production outsourcing and service outsourcing and also about their classification. Based on this, this chapter reviews the theory of economic globalization, transnational outsourcing activities of international division of labor theory, value chain theory and national competitive advantage theory. I also made a brief introduction of the related theories of enterprise performance. Meanwhile, scholars form both home and abroad have done the research on the effects of transnational outsourcing, which are briefly introduced in this chapter.The third chapter outlines the position of our companies under the wave of outsourcing. This chapter first describes briefly about the policy support and guidance to outsourcing companies of our government, and then divides into production outsourcing and service outsourcing area for introducing the development of its companies separately.The fourth chapter is mainly about the theoretical assumptions of this article. It gives details of research methods, research ideas, variables selection and data and also how to deduce the empirical model.The fifth chapter is about the empirical study on China’s undertaking international outsourcing, which is the core part of this paper. We made a research by descriptive statistics and empirical statistics. The ultimate purpose of this paper is to prove that throughout undertaking international outsourcing whether there is a contribution to our firms’ performance and whether there is a positive effect of technology spillovers, which promotes corporate productivity and technology innovation of firms in China. Hundreds of companies of electronic information industry, communications industry, mechanical industry and electronic components industry listed in China’s Shanghai and Shenzhen Stock Exchange traded as A-shares from2010to2012are selected as study samples. The empirical study is divided into three parts. The first part is the study of the overall sample of all companies, which is aimed to study whether the outsourcing dummy variable has an effect on the performance of firms. The second and third parts are the empirical study against partial samples. We use the outsourcing companies out of all the companies in four industries and study the influence of outsourcing intensity. In the third part, we use the proportion of undertake transnational outsourcing to investigate the influence of undertaking transnational outsourcing to companies’ performance. The regression results show that companies who undertake international service outsourcing will have an improvement on their ability of research innovation. And the transnational production outsourcing would hinder the improvement of companies’ development without bringing significant effect to the profit margin and innovation ability.The sixth chapter is first to summarize again our findings. Based on the results of the empirical research, we put forward some relevant policy recommendations for national enterprises of both production and service outsourcing. The last part of the article also gives some of the deficiencies and needs which to be improved in the future.