1. ¹Anderson School of Management, University of New Mexico, Albuquerque, USA
2. ²College of Business Administration, San Diego State University, San Diego, USA

Correspondence: D Di Gregorio, Anderson School of Management, University of New Mexico, MSC 05-3090, 1924 Las Lomas NE, Albuquerque, NM 87131-0001, USA. Tel: +1 505 277 3751; Fax: +1 505 277 9868; E-mail: digregorio@mgt.unm.edu

Received 2 October 2006; Revised 11 August 2008; Accepted 12 August 2008; Published online 27 November 2008.

Abstract

Scholars typically view offshore outsourcing as a means of reducing the cost of manufacturing activities for large corporations, yet offshore outsourcing may entail administrative and technical services, and may include activities outsourced by small and medium-sized enterprises (SMEs). Drawing on research in international entrepreneurship and services, we hypothesize and find evidence that offshore outsourcing of administrative and technical services by SMEs is associated with greater extent and scope of internationalization of sales. Offshore outsourcing enhances international competitiveness by enabling SMEs to reduce costs, expand relational ties, serve customers more effectively, free up scarce resources, and leverage capabilities of foreign partners.