Managing integration in outsourcing relationships — The influence of cost and quality priorities

Outsourcing has become increasingly popular in the contemporary business context. This study aims to develop the understanding of outsourcing by addressing the management of integration in the outsourcing relationship between buyers and contract manufacturers. Specifically, we address the effect of strategic priorities of cost and quality on how different modes of integration are used both before and in the early phase of production. The paper elaborates the strategic contingency argument by analyzing qualitative data from eight cases in the food and electronics industries. The results indicate that managing the outsourcing relationship requires considerable resources after the decision to outsource has been made. The results show that integration in the outsourcing relationship evolves over time and the use of integration modes is contingent on the strategic priority. The study provides an understanding of the contextual nature of integration in the outsourcing relationship, as well as a contextualized understanding of buyer-supplier relationships. It also provides an illustration of theory elaboration research.     

The 18C's model for a successful long-term outsourcing arrangement

The purpose of this paper is to identify the factors that contribute to a successful long-term outsourcing arrangement, particularly in the facilities management area. Organisations expect to achieve many benefits from outsourcing, despite the fact that there are significant risks associated with unsuccessful outsourcing. The paper analyses a successful multiple activity outsourcing case study. Six managers and team leaders, who have initiated and managed the sixteen outsourced activities during an eight year period, were interviewed. In order to complement and confirm the interviews, the observation of four monthly performance review meetings was conducted. Eighteen key success factors for a long-term outsourcing arrangement have been identified and approved by the interviewees. They have been used to construct the 18C's model.     

Who explores further? Evidence on R&D outsourcing from the survey of research and development

Building off the resource‐based view and the knowledge‐based view, our study aims to examine determinants of firms’ R&D outsourcing, using annually‐conducted firm‐level survey data of Japanese R&D companies from 1984–2012. This survey allows us to measure strategic R&D outsourcing, isolated from those more for cost‐reducing, such as prototyping, testing and inspecting. The results corroborate the argument of complementarity in scale between internal R&D and R&D outsourcing. We also find that firms employing more doctorate holders and diversifying in knowledge spaces tend to make more use of R&D outsourcing. This study sheds light on firms’ absorptive capacity, associated both with higher‐order R&D human capital and diversified knowledge spaces, as determinants of R&D outsourcing.     

A REAL OPTIONS DESIGN FOR PRODUCT OUTSOURCING

Product outsourcing is recognized as a way to gain flexibility for competitive advantage. We formulate the outsourcing problem using real options. We develop a financial model to assess the option value of product outsourcing. Specifically, we consider a three state-variable problem and use Monte Carlo simulation to estimate the value of the option. This valuation gives decision makers a way to choose the appropriate outsourcing strategy based on an integrated view of the market dynamics. A case example from the apparel manufacturing industry is used to demonstrate the application of real options to value outsourcing flexibility. We show that the inability of classical net present value methods to address dynamics in the market condition leads to an undervaluing of the outsourcing strategy. Numerical results and sensitivity analysis show how the real options approach can be used to give a better view of the long-term value of outsourcing.     

NAFTA as a Means of Raising Rivals' Costs: A Comment

The purpose of this comment is toclarify and extend a recent paper entitled NAFTA as a Means of Raising Rivals Costs. The paper indicates that the complexity of complying with the rules of NAFTA may lead to a decrease in competition in the domestic market. The comment shows that thecomplexity of NAFTA is related to the rules of origin which are a part of virtually any free-tradeagreement. Since rules of origin are a necessary part of virtually any trade agreement, the conclusions of the paper are not restricted to NAFTA but can be generalized to a large part of international trade.     

组织间关系:界面规则的演进与内在机理研究

组织间关系的界面规则是动态演进的,组织间学习是界面规则演进的背后机理。本文考虑外界环境的变动对组织间关系界面规则的影响,指出组织间关系网络成员长期重复性的互动是界面规则形成的基础,并重点探讨了组织间关系界面规则的自组织演进过程,揭示出界面规则的演进是组织间关系成员之间的互动与组织间关系界面之间相互转换的螺旋上升的动态过程,并对界面规则演进的内在机理——双元模式和组织间学习做出了解释。     

The role of design method and process technology in stable outsourcing equilibria

We analyze a model of vertical (dis)integration between manufacturing and design in a monopolistically competitive market. Specialized input manufacturers can serve multiple design firms and the manufacturer-designer pairs negotiate a non-binding contract to share input customization cost and production surplus. Hand-collected data on 387 product lines from 118 semiconductor firms are used to predict the firm’s decision to outsource manufacturing. We find that, for instance, the use of design tools that facilitate collaboration and process technologies that facilitate learning are both positively associated with outsourcing, consistent with the model’s prediction.     

Offshore outsourcing of services: An evolutionary perspective

Offshore outsourcing is gaining increasing importance and attention in both theory and practice. The purpose of this research is to use nine in-depth case studies to analyze the evolution of offshore services outsourcing with regard to how expectations and governance structures change over time. Five testable propositions are presented, building on institutional theory, transaction cost, and resource-based perspectives. The cases demonstrate that offshore outsourcing is initiated because of increasing internal and external pressure to conform and reduce costs. Moreover, companies “chase” efficiency improvements in other geographic locations. But after reducing costs, companies discover more strategic benefits such as the potential to increase quality and market share. Importantly, as buyer–supplier relationships move from tactical to more strategic, expectations and governance structures change.     

Conflict handling, trust and commitment in outsourcing relationship: A Chinese and Indian study

This paper presents a theoretical and empirical model that identifies conflict handling typologies which affect trust and commitment in B2B outsourcing relationship. Three typologies of conflict handling namely integrating, accommodating and compromising were examined for their effects on trust and commitment of Chinese and Indian human resource (HR) outsourcing service providers. The paper also considered the moderating effect of culture in the relationship. Data was collected from Chinese and Indian firms providing HR outsourcing services and analyzed using factor and hierarchical multiple regression analyses. We found both similarities and dissimilarities in the outcomes of the study. Specifically, conflict handling styles are significantly associated with trust and commitment. Trust mediates in the association of conflict handling styles with commitment. The impact of compromising conflict handling on trust and commitment is moderated by culture — significantly higher for the Chinese service providers compared to the Indians. Culture has also a direct impact on commitment but not on trust. Theoretical, cultural and managerial implications of the findings are presented.     

Leveraging supplier capabilities: The role of locus of capability deployment

This study adds to the resource‐based view by studying how client firms may gain performance benefits from supplier IT capabilities in market‐based arrangements where the supplier's IT capabilities are readily available to multiple client firms. I argue that the locus of supplier capability deployment, i.e. whether supplier capabilities are deployed at the client (in‐sourcing) or supplier (outsourcing), has implications for client firm performance. The findings show that in‐sourcing leads to complementary effects between supplier IT capabilities and client operational capabilities. In contrast, clients with weaker operational capabilities benefit from outsourcing the respective activity to the supplier, and may even be able to reduce their capability disadvantage through outsourcing. The data on 964 U.S. credit unions contracting with 22 technology solution providers is archival. Copyright © 2012 John Wiley & Sons, Ltd.     

Fields of opportunity: How marketers design the transaction game with transaction field maps

While the importance of transaction institutions, or rules, has long been established in the area of marketing governance, marketers and academics alike would benefit from guidance in the strategic use of the rules of the transaction game. This is particularly important in B2B and industrial markets where innovations in the rule-making environment have a significant effect on innovation. Strategically, the organization achieves its customer objectives by creating arenas for transacting, termed transaction fields, in which social actors transact. The fundamental argument is that organizations create transaction fields to depict the benefits of transacting to customers. Accordingly, managers must focus on strategic transactions; those that fundamentally change the way that transacting takes place in the transaction field. Using a historical case of the American cotton factor, this research demonstrates how marketers overcome factors that limit transacting by mapping their actions in transaction fields using rules. This specialization may result in the emergence of marketing intermediaries and lead to competitive advantage.     

The impact of outsourcing new technologies on integrative capabilities and performance

Outsourcing plays an important role for firms adopting new technologies. Although outsourcing provides access to a new technology, it does not guarantee that a firm can subsequently integrate the technology with existing business processes and leverage it in the marketplace. This distinction, however, has rarely been made in the literature. In the context of business process enhancing technologies, this study builds on the resource‐based and knowledge‐based views to study the impact of outsourcing on firms' subsequent performance in the market and their integrative capabilities, that is, a firm's capacity to use and assimilate a new technology with its business processes and build upon it. The study argues that greater reliance on outsourcing may reduce a firm's learning by doing, internal investment, and tacit knowledge applications, thereby impeding a firm's integrative capabilities and performance in the market. The study uses survey and archival data on banks' outsourcing strategies for Internet adoption to test for the performance consequences of outsourcing, which are found to be negative. However, the findings also show that outsourcing is less detrimental for firms with experience in prior related technology. Copyright © 2009 John Wiley & Sons, Ltd.     

Outsourcing, performance, and the role of e-commerce: A dynamic perspective

In a highly competitive global environment, many manufacturers respond by setting up outsourcing relations for components and finished products with lower-cost producers on a contractual OEM (original equipment manufacture) basis. In the last decade, we have witnessed a spectacular growth in outsourcing activities led primarily by U.S. and Japanese companies, although their approaches to outsourcing strategy and supplier relations are different. However, outsourcing strategy is not without drawbacks. We offer a dynamic perspective of outsourcing strategy and its performance implications, in which we argue that there is an optimal degree of outsourcing. The outsourcing-performance relationship takes on an inverted-U shape, implying that as firms deviate further from their optimal degree of outsourcing, by either insourcing or outsourcing too much, their performance will suffer disproportionately. We then discuss how e-commerce affects where the optimal point of any particular firm is located, hence explicitly linking developments in e-commerce to changing outsourcing levels. We provide implications for the practice and study of outsourcing and e-commerce.     

Lone wolf or social monkey? The role of marketing outsourcing in the development of second-order marketing competences

Marketing outsourcing has been increasing for decades due to its well-known benefits, even though the development of dynamic marketing capabilities can be severely damaged as a result. This study focuses on the conditions under which marketing outsourcing favors organizational learning. We found that the relationship between marketing outsourcing and second-order marketing competences resembles an inverted U curve. The first-order marketing competences and absorptive capacity positively moderate this relationship both individually and jointly, by shifting the U-curve to the right. Thus, any firm has an optimum level of beneficial outsourcing that depends on how skilled it is in the outsourced marketing function and its ability to assimilate and apply new knowledge. Our findings provide learning-related criteria for the outsourcing decision. Firms that will consider them can develop a knowledge-based competitive advantage while still enjoying the benefits of outsourcing. Against the common wisdom, we show that the development of new marketing capabilities is an equally challenging task for marketing functions with both low and high knowledge intensity.     

基于Revit土建工程算量三种模式的对比分析

近年来,国家陆续出台相关政策推进工程造价行业的转型升级,强化BIM技术在工程造价管理中的应用成为行业技术进步的重要方面。BIM技术在项目管理中的应用越来越广,其中在工程造价管理中的应用最为成熟。工程量计算是工程造价管理业务中最基础的工作,利用Revit建模进行工程量的计算可以缩减算量工作时间,提高工程计量的准确度与效率,实现对整个工程造价的实时、动态、精确的成本分析。基于BIM技术的工程算量已经成为必要的技术手段,其技术路径主要包括按照计算规则建模、利用Revit插件和利用算量插件提取构件几何尺寸等三种途径。通过对这三种不同技术路径BIM建模进行工程量计算的实证分析和比较,可以知道在Revit模型提取构件几何尺寸利用算量插件按规则算量可以直接利用BIM正向设计成果以提高工作效率和计算结果的精度,同时也便于实现“一模多用”的建筑信息化管理目标。     

Outsourcing decision-making aspects considered by IT departments in Brazilian companies

The study of Information Technology (IT) outsourcing is relevant because companies are outsourcing their activities more than ever. An important IT outsourcing research area is the decision-making process. In other words, the comprehension of how companies decide about outsourcing their IT operations is relevant from research point of view. Therefore, the objective of this study is to understand the decision-making process used by Brazilian companies when outsourcing their IT operations. An analysis of the literature that refers to this subject showed that six aspects are usually considered by companies on the evaluation of IT outsourcing service alternatives. This research verified how these six aspects are considered by Brazilian companies on IT outsourcing decisions. The survey showed that Brazilian companies consider all the six aspects, but each of them has a different level of importance. The research also grouped the aspects according to their level of importance and interdependency, using factorial analysis to understand the logic behind IT outsourcing decision process.     

资源外包网络的治理研究

资源外包网络作为一种特殊的资源联合体,其运作过程并非十全十美,机会主义行为和知识分享问题及其引致的网络失灵成为网络治理的主要诱因。资源外包网络的治理包含两个层面:关系治理和结构治理。机会主义行为多发生于外包商和供应商双边交易过程中,对应于资源外包网络的关系治理;知识分享问题涉及网络整体的协调与管理,对应于网络的结构治理。论文分别从关系治理和结构治理两个角度剖析了资源外包网络的治理特点、作用机制和治理对策。     

2004年以来我国人力资源管理外包理论研究综述

当前,人力资源管理外包的浪潮席卷全球,人力资源管理外包的研究日益成为管理创新研究的重点。文章从人力资源管理外包的动因、外包的理论基础、外包的内容及方式、外包的风险及对策、外包的实施等方面对2004年以来我国人力资源管理外包理论研究加以综述,并据此对未来的人力资源管理外包理论研究进行展望。     

Managing Intellectual Property in Global Outsourcing for Innovation Generation

The globalization of markets and business operations is a trend that will continue strongly in the coming decades. One inescapable aspect of globalization has been the trend toward global outsourcing, especially that of knowledge‐based services. Due to firms' compulsion to reduce costs in the developed world, the issue is not if a particular firm will outsource or offshore work but when it will outsource it and how effectively it will leverage outsourcing to achieve superior competitive advantage. An important implication of the outsourcing of knowledge‐based services is the management of intellectual property (IP). Managers and researchers alike are interested in understanding the effects of global outsourcing of knowledge‐based services on the management of IP. The challenge of accessing, exploiting, and defending IP in global outsourcing relationships is first examined in this paper. IP can be managed by balancing the trust and control and verification in the outsourcing relationship. Given that defending IP is a major concern for outsourcing firms, the moderating roles of multitier suppliers, supplier country legal regimes, and global supplier communities of practice on defending IP is examined in detail through moderating effect propositions. Finally, the paper examines the effect of accessing, defending, and exploiting IP in global outsourcing relationships on the generation of incremental and radical innovation for the outsourcing firm. This research tries to extend current academic research on global outsourcing in three ways. First, it offers a framework to understand the management of the buyer–seller relationship in the global outsourcing of knowledge‐based services and its relationship to the management of IP and innovation generation. Second, the framework takes a broader perspective of outsourcing and innovation generation, including globalization, tiered suppliers, supplier country legal regimes, and global supplier communities of practice on defending IP. Third the research examines the effect of accessing, exploitation, and defense of IP on generation of incremental and radical innovation for the outsourcing firm. Managerial implications of this research and future research directions are also discussed.     

The supplier's side of outsourcing: Taking over activities and blurring organizational boundaries

Since most of the literature on outsourcing focuses only to the buying (outsourcing) company, this paper aims to highlight the supplier's side from a relational perspective. The paper stresses the importance of business relationships between suppliers of outsourced activities and their customers. The paper's purpose is specified in two research questions: (1) how is value created within outsourcing and (2) how does the supplier interact with the outsourcing company? Our method relies on an in-depth qualitative case study of Logoplaste, a Portuguese packaging company which supplies large consumer goods manufacturers through complex outsourcing activities. Our analysis identifies three key dimensions of outsourcing relationships: (1) value co-creation via inter-firm coordination (as opposed to unilateral externalization of activities); (2) mutual dependence between supplier and customer due to the supplier's taking over activities; and (3) the blurring of organizational boundaries because of mutual dependence. These dimensions manifest themselves, even though in different degrees, after the initiation of any outsourcing relationship: these variables are new to the literature on outsourcing, which focuses on the ex ante dimensions that influence the customer's pre-relational choices such as “make or buy” and relationship type.