79
80 Considering the transaction scope, the offshoring location decision, it was found that the decision is based on the sourcing decision criterium. An activity ought to be offshored only if the expected return, also accounting for disintegration costs, exceeds the expected returns of the other sourcing modes. A similar approach applies when firms decide between several potential offshoring partners.
To solve the sourcing decision criterium, firms will engage in information search to acquire information about the various parameters. Here, the beforementioned principles of information network economics find their relevance. The ability of firms to identify and evaluate potential offshoring partners is subject to the global and local information network structures in which they are embedded, affecting the available supply of transaction-specific information. In this context, the concept of horizontal information asymmetries is useful to explain an empirical phenomenon where offshoring location decisions are heterogenous between clusters and homogeneous within clusters. Ultimately, information network economics challenge the traditional offshoring frameworks, suggesting that their theoretical values are merely normative. A descriptive theoretical approach to offshoring needs to account for the asymmetries of real-life information networks to fully encompass the concept of decisional heterogeneity.
Empirically, the thesis is occupied with the social network links that firms in the DDVC leverage to acquire information about potential offshoring partners. Reviewing literature on organization in digital visual industries, it was found that industry actors actively search for information in social networks to reduce the transaction costs of the project-based organizational model. Further, the firms commonly offshore standardized production activities in the middle of the value chain to reduce labor costs. This understanding led to the establishment of three hypotheses to examine the causal relationship between the firms’ information search in social networks and their offshoring location decisions. To investigate the hypotheses, a questionnaire was distributed to nearly 500 Danish production firms within the industries of film, TV, advertising, and digital games.
Regretfully, the response and completion rates were very poor, constraining the reliability of the findings. Indications were found that social network information sources are important for the identification and evaluation of potential offshoring partners, although they do not have monopoly of the firms’ information search. It appeared that the social networks are clustered around the DDVC, yet many external links to connections in the EU were also observed. Theoretically, the external links facilitate the infusion of information into the DDVC, improving the decisional
81 rationality of the firms. It was, given the data foundation, not possible to assess whether social network information search promotes decisional homogeneity within the cluster. Nevertheless, the answer to this question essentially depends on the structures of the social networks; homogeneity in transaction decisions is cultivated in symmetric network structures. This condition challenges the generalizability of the empirical findings. Although it could have been observed that social network information search produces homogenous offshoring location decisions among the firms in the DDVC, the findings can only be generalized to other clusters with the same local network structures.
In sum, the most important contribution of this thesis is the presented theory on information network economics, opposing the law of one price. To the extent of my knowledge, no existing theories fully capture how transaction decisions are impacted by the structures of the information networks in which the firms are embedded. Acknowledging my own limitations, I hope that these thoughts can contribute to a more nuanced understanding of the complexities of market supply.
82
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Appendices
Overview of appendices
Appendix 1: The data underlying the use of social network information sources Appendix 2: Transcript of the questionnaire
Note: the full data set is uploaded as a separate file.
Appendix 1: The data underlying the use of social network information sources
Table 1. Number of links to information sources in the identification phase
Type of information source Very
important Important Moderately
important Slightly
important Not important
Past collaborations 4 6 1 3 0
Employees within the firm 1 1 0 0 0
Own research 7 6 2 1 0
Personal contacts 5 3 0 0 1
Professional contacts 9 9 1 0 0
Consultancy 0 0 0 0 0
Festivals, conferences, fairs,
etc. 8 5 3 0 0
Inquiries from firms 3 2 1 1 0
Total 37 32 8 5 1
N = 49.
Table 2. Number of links to information sources in the evaluation phase
Type of information source Very
important Important Moderately
important Slightly
important Not important
Past collaborations 5 6 5 0 0
Employees within the firm 1 0 0 0 0
Own research 8 7 0 0 0
Personal contacts 5 1 0 0 0
Professional contacts 8 6 1 0 0
Consultancy 0 0 0 1 0
Festivals, conferences, fairs,
etc. 5 3 0 2 0
Inquiries from firms 1 1 1 0 0
Meetings with firms 13 5 0 0 0
Total 46 29 7 3 0
N = 49.
Appendix 2: Transcript of the questionnaire
Part 1: Have they offshored?
Q2.1 Have you within the past five year been involved in one or more productions where you collaborated with a foreign supplier or partner? This does not include general sale or distribution.
- Possible answers:
o Yes o No
Part 2: Those who have offshored
Q3.1 How many of such productions have you been part of within the past five years?
- Possible answers:
o One
o Up to three o Up to five o More than five
- If they have tried it once, they have to describe that project. If they have tried it more than once, they have to describe the two most important projects with different partners (they are asked all the following questions twice)
Q4.2 Please name the project where you collaborated with a foreign company.
- Open text question
Q4.4. Please specify the location of the partner - Possible answers:
o Scandinavia o EU
o UK
o USA o Canada o India
o China/Hong Kong o Singapore
o Philippines
o Australia/New Zealand o Middle East
o Other (write)
Q4.6 Which of the following production areas did the project relate to?
- Possible answers:
o Film and TV o Advertising o Digital games o Other (write)
Q4.9+10 Which of the following activities related to the project within film/tv/advertising/games were offshored to the foreign partner?
- Possible answers:
o Film/TV/advertising:
§ Casting, location
§ Management (coordination, economy)
§ Creatives (scenography, costumes)
§ Technique (photography, sound, lightening)
§ Specials (stunts, dance/music, special effects)
§ Programming
§ Cutting
§ Animation/CGI
§ VFX
§ Music
§ Sound/foley
§ Other (write) o Digital games:
§ Design/concept art
§ Engine
§ Animation/CGI
§ Matte/background
§ Music
§ Sound/foley
§ Other (write)
Q4.22 Which information sources did you use to identify the potential foreign partners?
- Possible answers:
o Employees within the firm o Own research
o Personal contacts (friends and family) o Professional contacts (other companies) o Consultancy
o Festivals, conferences, exhibitions and get-togethers
o Inquiries from companies (e.g. as a response to an announcement) o Other (write)
Q4.23 Please arrange the different information sources in accordance with their importance for the identification of potential foreign partners.
- Likert scale
o Very important o Important
o Moderately important o Slightly important o Not important
Q4.24+25 You have stated that one or more personal/professional contacts contributed to identifying potential foreign partners. Where was the most important contact located?
- Conditional. If they tick personal or professional contacts in Q4.22 - Possible answers:
o Same city o Denmark o Scandinavia o EU
o UK o USA o Canada o India
o China/Hong Kong o Singapore
o Philippines
o Australia/New Zealand o Middle East
o Other (write)
Q4.30 Which information sources did you use to evaluate the identified foreign partners?
- Possible answers:
o Employees within the firm o Own research
o Personal contacts (friends and family) o Professional contacts (other companies) o Consultancy
o Festivals, conferences, exhibitions and get-togethers
o Inquiries from companies (e.g. as a response to an announcement) o Meetings with firms
o Other (write)