Strategic collaboration between domestic and foreign firms on production outsourcing processes: Insights from a developing economy Firm's perspective

Abstract

Worldwide fragmentation of production stages enable the developed and developing economies' firms to gain from ‘foreign outsourcing collaboration (FOC)’. Literature indicates that the majority of studies on foreign outsourcing are based on the perspective of developed countries. Nevertheless, a meager amount of literature is available from the perspective of developing countries. This study bridges the research gap by employing field survey based data collected from 217 textile and apparel firms located in Faisalabad-Pakistan, for the fiscal year 2022. This study mainly examines the impact of: (i) investment in information technology (IT) on FOC in the production process; (ii) strategic integration of outsourcing policies on FOC in the production process; and (iii) strategic policy firms' adopted on FOC in the production process. SmartPLS 4 has been utilized to estimate the partial least square structural equation model. The results signify that investment and utilization of IT induce a higher level of firm performance by enhancing firms' efficiency and improving product quality. Moreover, FOC in production processes increases product quality whereas investment in IT attracts FOC in production processes. The study concludes by offering specific policy recommendations.

Keywords

• Foreign outsourcing collaboration
• Information technology
• Strategic integration
• Developing economy
• Textile and apparel firms
• Pakistan