Journal of Operations Management 32 (2014) 241–253 Contents lists available at ScienceDirect Journal of Operations Management j o ur na l ho mepage: www.elsevier.com/locate /jom Global sourcing and quality recalls: An empirical study of outsourcing-supplier concentration-product recalls linkages Adams B. Steven a,∗ , Yan Dong b,1 , Thomas Corsi c,2 a Isenberg School of Management, University of Massachusetts – Amherst, United States b Darla Moore School of Business, University of South Carolina, Columbia, SC 29208, United States c Robert H. Smith School of Business, University of Maryland, College Park, United States a r t i c l e i n f o Article history: Received 10 July 2013 Received in revised form 1 April 2014 Accepted 11 April 2014 Available online 24 April 2014 Keywords: Product recalls Global sourcing Empirical research Outsourcing Offshoring a b s t r a c t This study investigates how supply chain sourcing strategies are associated with product quality recalls. In particular, the research examines how make-or-buy decisions (i.e., outsourcing), the use of foreign suppliers (i.e., offshore outsourcing), the relocation of production to offshore markets (i.e., offshoring), and decisions to consolidate supply bases (i.e., the use of few vs. myriad suppliers) are related to product recalls. Product recalls are serious quality failures in supply chains with significant, negative impacts on firm performance. Product recalls are frequently connected to the globalization of supply chains. Globalization has, at times, promoted inconsistency in quality control and standards, leading to quality problems and failures. Data across multiple industries, with widely reported recalls, have been collected and analyzed using regression techniques. Our findings indicate that offshore outsourcing has a greater impact on recalls than offshoring without outsourcing; outsourcing domestically has the least influence. Outsourcing to a smaller supplier base may lead to fewer recalls at low levels of outsourcing. However, it may exacerbate the impact of outsourcing on recalls at high levels of outsourcing. © 2014 Elsevier B.V. All rights reserved. 1. Introduction Most industries have seen an increase in outsourcing and offshoring activities, ranging from business processes and informa- tion technology (Corbett, 2005) to production and manufacturing (Wilhelmsson, 2004). While outsourcing and offshoring are moti- vated by myriad factors, cost savings are most often the driving force (e.g., Landis et al., 2005; Insinga and Werle, 2000; Kakabadse and Kakabadse, 2003; Cecere, 2005). However, these strategies may have unintended consequences, such as increased exposure to quality risks resulting from reduced control and visibility in the supply chain (e.g., Doig et al., 2001; Landis et al., 2005; Robinson et al., 2008). In this study, we investigate the relationship between outsourcing and product quality via product recalls. We examine different forms of outsourcing, subsequent supply chain implica- tions, and hypothesize relationships linking individual structural measures in the supply chain related to outsourcing and product ∗ Corresponding author. Tel.: +1 413 545 5625. E-mail addresses: asteven@isenberg.umass.edu (A.B. Steven), Yan.Dong@moore.sc.edu (Y. Dong), tcorsi@rhsmith.umd.edu (T. Corsi). 1 Tel: +1 803 777 4351. 2 Tel: +1 301 405 2197. quality (as measured by product recalls of individual firms). We also examine the interactions between key attributes of outsourcing and their joint effects on product quality. Outsourcing involves changes in supply chain governance, but research has been rare in examining the role of supply chain governance in managing product quality and the likelihood and frequency of quality failures. More broadly, Leiblein et al. (2002) suggest an examination of how governance strategies affect not only profits but also risks as well. Quality risks may be higher under outsourcing because, as indicated in Marucheck et al. (2011), outsourcing and offshoring make supply chains longer and more complex as more hands touch products moving across supply chain nodes and international boundaries. Further, outsourcing involves losing a degree of control over outsourced activity, which creates avenues for opportunism. While some risks (e.g., product recalls) intuitively seem greater with outsourcing and offshoring, limited research has been conducted on this relationship. Decisions, associated with out- sourcing/offshoring decisions, can impact the structure of supply chains. Key choices (e.g., the extent of supply base diversification or concentration) may be related to quality risks resulting from complexities in supply chains. This all leads to important research questions: Are quality recalls associated with outsourcing and off- shoring in supply chains? Which of the three outsourcing options http://dx.doi.org/10.1016/j.jom.2014.04.003 0272-6963/© 2014 Elsevier B.V. All rights reserved.