Offshore Outsourcing of Core and Non-Core Activities and Integrated Firm-Level Performance: An Empirical Analysis of Québec Manufacturing SMEs

The objective of this study is to demonstrate the relationship between outsourcing of core and non-core activities and integrated firm-level performance (IFLP) consisting of competitive, financial, strategic, and stakeholders’ performance. Empirical data was collected from manufacturing small and medium size enterprises (SMEs) in Quebec that outsource, using a web-based questionnaire. A linear regression analysis was performed to establish the relationship between outsourcing and IFLP. The findings show that outsourcing of non-core activities and insourcing (internalization) of core activities have a positive impact on a firm’s integrated performance. The findings also demonstrate that offshore outsourcing enhances the economic, social, and strategic performances of manufacturing SMEs, which enables them to thrive in the current volatile business environment. However, managers need to identify carefully functions that could be outsourced in order to determine trade-offs between outsourcing and internalization. The broadness of the IFLP concept and the intrinsic complexity of offshore outsourcing tasks call for further study with larger samples.