City Research Online

Abstract

We explore how companies with a history of offshoring attract their future employees. We reason that offshoring decisions send unintended signals about job insecurity to companies’ onshore labor markets. This signaling effect implies that offshoring companies must pay higher salaries for new hires than non-offshoring companies. We tested our predictions on a sample of 7971 matched managers and professionals recently hired by offshoring and non-offshoring companies. Our results indicate a 3–7% wage penalty for offshoring companies. Thus, we conclude that not only is offshoring challenging to implement, but it can also entail a number of general ramifications for the domestic labor market.

Publication Type:	Article
Additional Information:	This is a post-peer-review, pre-copyedit version of an article published in Journal of International Business Studies. The definitive publisher-authenticated version Grecu, A., Sofka, W., Larsen, M.M. et al. Unintended signals: Why companies with a history of offshoring have to pay wage penalties for new hires. J Int Bus Stud 53, 534–549 (2022) is available online at: https://doi.org/10.1057/s41267-021-00486-3.
Publisher Keywords:	Offshoring, hiring, wage penalty, hidden costs, signaling theory
Subjects:	H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Departments:	Bayes Business School > Management
SWORD Depositor:	Symplectic Administrator

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