Supply Chains and Porous Boundaries: The Disaggregation of Legal Services

The economic downturn has had significant effects on law firms, and is causing many of them to rethink some basic assumptions about how they operate. In important respects, however, the downturn has simply intensified the effects of some deeper trends that preceded it, which are likely to continue after any recovery that may occur. This paper explores one of these trends, which is corporate client insistence that law firms “disaggregate” their services into discrete tasks that can be delegated to the least costly providers who can perform them. With advances in communications technology, there is increasing likelihood that some of these persons may be located outside the formal boundaries of the firm. This means that law firms may need increasingly to confront the make or buy decision that their corporate clients have regularly confronted for some time. The potential for vertical disintegration is a relatively recent development for legal services, but is well-established in other sectors of the global economy. Empirical work in several disciplines has identified a number of issues that arise for organizations as the make or buy decision becomes a potentially more salient feature of their operations. Much of this work has focused in particular on the implications of relying on outsourcing as an integral part of the production process. This paper discusses research on: (1) the challenges of ensuring that work performed outside the firm is fully integrated into the production process; (2) coordinating projects for which networks of organizations are responsible; (3) managing the transfer of knowledge inside and outside of firms that are participants in a supply chain; and (4) addressing the impact of using contingent workers on an organization’s workforce, structure, and culture. A review of this research suggests considerations that law firms will need to assess if they begin significantly to extend the process of providing services beyond their formal boundaries. Discussing the research also is intended to introduce concepts that may become increasingly relevant to law firms, but which currently are not commonly used to analyze their operations. Considering how these concepts are applicable to law firms may prompt us to rethink how to conceptualize these firms and what they do. This paper therefore is a preliminary attempt to explore: (1) the extent to which law firms may come to resemble the vertically disintegrated organizations that populate many other economic sectors and (2) the potential implications of this trend for the provision of legal services,the trajectory of legal careers, and lawyers’ sense of themselves as members of a distinct profession

Organising new product development Knowledge hollowing-out and knowledge integration

The paper analyses the organization of the new product development process at FIAT from a resource-based perspective. The focus is on organizational resources for integrating dispersed specialist knowledge required in the development of complex products. The analysis shows how the application of a resource-based perspective is able to uncover negative long-term effects of outsourcing on the knowledge base (hollowing out), despite beneficial short-term effects on cost.New product development, FIAT Auto, knowledge integration systems integration, modularity, knowledge hollowing-out, resource-based view

Beyond product architecture: Division of labour and competence accumulation in complex product development

This paper considers the trade-off between leveraging external sources of innovation by outsourcing design and engineering activities and the ability to develop internal product development competences. The trade-off arises because the division of labor within and across firms' boundaries has a crucial role in shaping competence development processes, especially because the division of labor also influences opportunities for learning by doing. In new product development projects, learning by doing appears to be both a key determinant of competence development and a difficult-to-substitute form of learning. While the division of development tasks is often considered as guided by product architecture, we show that by decoupling the decisions concerning the product architecture and the allocation of development tasks, firms can realize the benefits of outsourcing such tasks while developing new internal competences. Drawing on a longitudinal case study in the automotive industry, we also identify a new organizational lever for shaping competence development paths and for designing firm boundaries. This lever consists in alternating different task allocation schemes over time for different types of development projects. We show why this is a novel solution, what its underlying logic is, and how it enables alleviating the trade-off between the benefits of leveraging external sources of innovation and the opportunities for competence development provided by in-house design and engineering. We discuss implications for theories of organizational boundary design and innovation management.innovation management; organizational boundaries; outsourcing; product architecture; modularity; new product development; template process; automotive industry; Fiat

The Economics Of System Integration: Toward An Evolutionary Interpretation.

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A review of modular strategies and architecture within manufacturing operations

This paper reviews existing modularity and modularization literature within manufacturing operations. Its purpose is to examine the tools, techniques, and concepts relating to modular production, to draw together key issues currently dominating the literature, to assess managerial implications associated with the emerging modular paradigm, and to present an agenda for future research directions. The review is based on journal papers included in the ABI/Inform electronic database and other noteworthy research published as part of significant research programmes. The research methodology concerns reviewing existing literature to identify key modular concepts, to determine modular developments, and to present a review of significant contributions to the field. The findings indicate that the modular paradigm is being adopted in a number of manufacturing organizations. As a result a range of conceptual tools, techniques, and frameworks has emerged and the field of modular enquiry is in the process of codifying the modular lexicon and developing appropriate modular strategies commensurate with the needs of manufacturers. Modular strategies and modular architecture were identified as two key issues currently dominating the modular landscape. Based on this review, the present authors suggest that future research areas need to focus on the development and subsequent standardization of interface protocols, cross-brand module use, supply chain power, transparency, and trust. This is the first review of the modular landscape and as such provides insights into, first, the development of modularization and, second, issues relating to designing modular products and modular supply chains

Offshoring and Home Country R&D

National concerns are sometimes raised against offshoring of economic activities to other countries. While most of the existing literature has focused on the effects on labor demand and productivity the effects on domestic R&D have been neglected. This is unfortunate since the decision to offshore activities also includes R&D. We use unique and rich firm level data for the Swedish manufacturing sector to analyze how offshoring impacts domestic R&D and how these effects vary with respect to target region and type of firm. The results suggest that offshoring of production alter a firm’s investments in R&D in Sweden and that a negative impact on home country R&D is confined to offshoring by non-multinationals and offshoring to Europe and EU15 countries.Offshoring; R&D; Manufacturing sector; EU15

Business services and the changing structure of European economic growth

A pervasive trend that characterised the past two decades of European economic growth is that the share in the economy of commercial services, and particularly business services, grows monotonically, and this mainly to the expensive of the manufacturing sector. The structural shift reflects a changing and increasingly complex social division of labour between economic sectors. The fabric of inter-industry relations is being woven in a new way due to the growing specialisation in knowledge services, the exploitation of scale economies for human capital, lowered costs of outsourcing in-house services, and the growing encapsulation of manufacturing products in a 'service jacket'. Business services, which inter alia includes the software industry and other knowledge-intensive business services (KIBS), play a key role in many of these processes. We argue that in recent decades business services contributed heavily to European economic growth, in terms of employment, productivity and innovation. A direct growth contribution stems from the business-services sector's own remarkably fast growth, while an indirect growth contribution was caused by the positive knowledge and productivity spill-overs from business services to other industries. The spill-overs come in three forms: from original innovations, from speeding up knowledge diffusion, and from the reduction of human capital indivisibilities at firm level. The external supply of knowledge and skill inputs exploits positive external scale economies and reduces reduces the role of internal (firm-level) scale (dis)economies associated with these inputs. The relatively low productivity growth that characterises some business-services sectors may be a drag on the sector's direct contribution to overall economic growth. The paper argues that there is no reason to expect a "Baumol disease" effect as long as the productivity and growth spill-overs from KIBS to other economic sectors are large enough. Finally, the paper concludes by pinpointing some policy 'handles' that could be instrumental in boosting the future contibution of business services to overall European economic growth.

Authority in the Age of Modularity

This paper builds upon on-going research into the organisational implications of 'modularity'. Advocates of modularity argue that the Invisible Hand of markets is reaching activities previously controlled through the Visible Hand of hierarchies. This paper argues that there are cognitive limits to the extent of division of labour: what kinds of problems firms solve, and how they solve them, set limits to the extent of division of labour, irrespective of the extent of the market. This paper analyses the cognitive limits to the division of labour relying on an in-depth case study of engineering design activities. On this basis, this paper explains why co-ordinating increasingly specialised bodies of knowledge, and increasingly distributed learning processes, requires the presence of knowledge integrating firms even in the presence of modular products. Such firms, relying on their wide in-house scientific and technological capabilities, have the 'authority' to identify, propose, and implement solutions to complex problems. In so doing, they co-ordinate networks of suppliers of both components and specialised competencies.modularity, division of labour limits, knowledge integrating firms

The rise of offshoring: it's not wine for cloth anymore

Productivity ; Wages