The impact of manufacturing offshore on technology development paths in the automotive and optoelectronics industries

Abstract

This dissertation presents a two-case study of the impact of manufacturing offshore on the technology trajectory of the firm and the industry. It looks in particular at the automotive and optoelectronics industries. The dissertation uses an innovative combination of engineering modeling and qualitative research methods to provide insights into this question. The results suggest an important difference between the two cases. In the automotive case, the results do not show that manufacturing offshore changes the path of technology development. In the optoelectronics case, the results do suggest that manufacturing offshore may be changing the path of technology development. The cross-case analysis reveals several important similarities between the two cases: (1) the relative economic positions of the emerging technology and the prevailing design shift when production is transferred to developing East Asia; (2) while the emerging design is more cost-competitive in the U.S. production structure, the prevailing design is more cost-competitive in the developing East Asia production structure; (3) firms initially do not understand the implications of moving offshore for the competitiveness of their designs; (4) firms choose to produce the prevailing design offshore; and (5) although the firms' decisions to produce the prevailing design offshore are rational in a static model, they fail to take into account dynamic diseconomies - specifically, disincentives and disadvantages for innovations critical to long-term markets. In its conclusion, this dissertation suggests a generalizable framework for how technology may influence manufacturing location and how manufacturing location may influence technology. To develop a more representative framework will require additional case studies.