Munich Personal RePEc Archive

Globalisation impact on Danish SME: Offshore Outsourcing & local competitiveness

Molintas, Dominique Trual (2010): Globalisation impact on Danish SME: Offshore Outsourcing & local competitiveness.

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Abstract

Offshore outsourcing is a prevailing deterrent in the business economic front. Given the competitive pressures put on firms, outsourcing is an elemental practice that can enable cost reduction measures and raise operating efficiencies; or otherwise access resources and competencies by simply choosing how and where to capture gains. This learning mechanism enhances organisation agility across geographical and cultural regions in a practice described unique to cross border operation strategic challenges, regardless of organisation age and size.

Within such context, better prospects are expected of organisations with diverse experience, typically serving very broad consumer markets. Competitiveness is nurtured from the right mixture of organisation culture and tacit knowledge; home grown expertise and leadership insight that creates a highly sophisticated value supply chain with a built-in complexity on organisation dynamics that influences the ability of the decision maker over cost implementation.

Denmark outsourcing activities are far more aggressive than European counterparts, with a small liberalised state economy and SMEs representing a greater proportion. Given its narrow national consumer base compensated through export oriented policy mechanisms; any structural changes in the economy must tantamount an increased role for the SMEs. In contrast of other European countries, employment protection is weak and Danish firms can fine-tune employment schemes with relative ease, even when more than three quarters of the whole labour force are union members. This peculiar labour market model has resulted to high turnover rates of an average tenure of about eight years. A Danish worker is remunerated with relatively generous unemployment benefits yet sternly reinforced through monitoring and sanction —otherwise known as the flexicurity labour model characterised with extreme wage dispersion particularly in the Danish labour market.

This study finds that there are no inhibiting elements on the future growth and development of the Danish SME. Firms engaged in offshore outsourcing see better prospects in those markets, with the leeway of establishing or increasing operations in those specific regions. Strategic alliances and closer relations with providers that seemingly blur the boundaries of the enterprise, has positive impact on the worker capability and wages in Denmark. For the future Danish SME has right disposition and ability to influence change.

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