What is the difference and why is the gap between different companies so large when it comes to the success or failure of offshoring?

Abstract: While much of the research on outsourcing and offshoring have been done with quantitative studies, where the respondents’ estimate what positive or negative effects measured by selected indicators on the Likert scale, offshoring has on the company (Freel M. , 2000). Little attention has been paid to understand the deeper development of the companies’ offshoring in a qualitative study. The aim of this study is to explore the transaction costs’ the companies has by moving to low cost countries (LCC) and how they utilize and develop their resources in form of dynamic capabilities and all this in relationship to the companies’ offshoring performance. We attempt to contribute to literature with a quality research approach, including three interviews from three Swedish small or medium sized companies, offshoring to an LCC. In the study empirical evidence suggests that it is very important what type of product you intend to offshore. Secondly it was found that when offshoring to an LCC, long term planning enhances the performance. Furthermore, the empirical evidence suggests that there is a positive relationship between the offshore unit’s development of dynamic capabilities and performance improvement. We recommend that management from the start acquire knowledge of local culture and the way of doing business and develop capability of handling that knowledge. Corporate management is advised to provide the offshore unit with necessary capabilities so that the offshore unit may be able to develop necessary production capabilities.