Overcoming inertia : drivers of the outsourcing process

Almost all managers have directly or indirectly been involved in the practice of outsourcing in recent years. But as they know, outsourcing is not straightforward. Outsourcing inertia, when companies are slow to adapt to changing circumstances that accommodate higher outsourcing levels, may undermine a firm’s performance. This article investigates the presence of outsourcing inertia and the factors that help managers overcome it. Using statistical evidence, we show that positive performance effects related to outsourcing can accumulate when circumstances change. This is then followed by rapid increases in outsourcing levels (i.e. outsourcing processes). We investigate what gives rise to these outsourcing processes through follow-up interviews with sourcing executives, which suggest five drivers behind outsourcing processes: managerial initiative (using outside experience); hierarchy (foreign headquarters); imitation (of competitors and of similar firms); outsider advice (from external institutions); knowledge sources (using external information). These five drivers all offer scope for managerial action. We tie them to academic literatures and suggest ways of investigating their presence and impact on the outsourcing process. Overall, we conclude that while economizing factors play a key role in explaining how much firms outsource, it is socializing factors that tend to drive outsourcing processes

Outsourcing, Supplier Relations, and the External Span of Control

The outsourcing and supplier relations literature focuses primarily on initial designs while ignoring how superior implementation skills can drive competitive advantage. The concept of external span of control, defined as a firm’s overall capability to manage multiple and varying relations with outside suppliers, is put forward to capture implementation differences. Its antecedents are described and strategies are provided for improving it involving growth, alignment, internal development, and inter-firm learning.

Qualitative Case Studies in Operations Management: Trends, Research Outcomes, And Future Research Implications

Our study examines the state of qualitative case studies in operations management. Five main operations management journals are included for their impact on the field. They are in alphabetical order: Decision Sciences, International Journal of Operations and Production Management, Journal of Operations Management, Management Science, and Production and Operations Management. The qualitative case studies chosen were published between 1992 and 2007. With an increasing trend toward using more qualitative case studies, there have been meaningful and significant contributions to the field of operations management, especially in the area of theory building. However, in many of the qualitative case studies we reviewed, sufficient details in research design, data collection, and data analysis were missing. For instance, there are studies that do not offer sampling logic or a description of the analysis through which research out-comes are drawn. Further, research protocols for doing inductive case studies are much better developed compared to the research protocols for doing deductive case studies. Consequently, there is a lack of consistency in the way the case method has been applied. As qualitative researchers, we offer suggestions on how we can improve on what we have done and elevate the level of rigor and consistency

Overcoming inertia : drivers of the outsourcing process

Almost all managers have directly or indirectly been involved in the practice of outsourcing in recent years. But as they know, outsourcing is not straightforward. Outsourcing inertia, when companies are slow to adapt to changing circumstances that accommodate higher outsourcing levels, may undermine a firm’s performance. This article investigates the presence of outsourcing inertia and the factors that help managers overcome it. Using statistical evidence, we show that positive performance effects related to outsourcing can accumulate when circumstances change. This is then followed by rapid increases in outsourcing levels (i.e. outsourcing processes). We investigate what gives rise to these outsourcing processes through follow-up interviews with sourcing executives, which suggest five drivers behind outsourcing processes: managerial initiative (using outside experience); hierarchy (foreign headquarters); imitation (of competitors and of similar firms); outsider advice (from external institutions); knowledge sources (using external information). These five drivers all offer scope for managerial action. We tie them to academic literatures and suggest ways of investigating their presence and impact on the outsourcing process. Overall, we conclude that while economizing factors play a key role in explaining how much firms outsource, it is socializing factors that tend to drive outsourcing processes

Ethics and taxation : a cross-national comparison of UK and Turkish firms

This paper investigates responses to tax related ethical issues facing busines

Examining resource based view against transactional costs Approach in the french poultry industry : treading upon eggs..

France; Intégration verticale; Coûts de la transaction; French Poultry Industry; Aviculture;

Networking strategy for competitive advantage

This paper explores the potential of networking strategy as a source of competitive advantage by integrating market- based and resource-based logics. It contributes to operations management literature by considering not just supply chain structures but also others kinds of network that can emerge from horizontal agreements (i.e. alliances, partnerships, joint ventures, etc.). The paper reviews the literature and develops propositions regarding how make/buy/make together decisions, governance mechanisms and network-base structures allow firms both to pursue operations performance objectives and obtain/create valuable resources. A case study supports the propositions and shows a practical application of the presented research framework

Prudential regulatory governance of the risks associated with IT multi-sourcing strategies within the Australian banking sector

Concerns about the adequacy of the Australian Prudential Regulatory Authority (APRA) prudential standards to govern the risks associated with the Australian banks’ multi-sourcing IT service delivery strategies provided the motivation for conducting this study. Three research questions were developed to investigate prudential risk management in the banking sector of the Australian Financial Services Industry (AFSI). RQ1: Do the banks employ complex multi-sourcing solutions driven by business unit demands to deliver their IT services? RQ2: What are the risk and governance model/s used by the banks to manage risks associated with their IT services multi-sourcing strategy? RQ3: Is the AFSI IT operational risk exposure adequately covered by the current APRA risk framework and prudential standards? The two largest Australian banks, Commonwealth Bank of Australia (CBA) and Westpac Banking Corporation (WBC) referred to as the ‘banks’ in this research are selected as the sample. CBA and WBC are the first and second largest banks when measured by capitalisation within the banking sector of the AFSI and represent 43 percent sample of the capitalisation value of the AFSI. Although profitable, the banks are under pressure from the market to reduce their cost-to-revenue ratio. One of the main strategies the banks employ to reduce IT costs is the outsourcing the delivery of IT services. Over the past five years a trend has evolved with the banks using offshore-outsourcing to deliver IT services and gain further IT savings. However little empirical research has investigated what impact this trend has had on the risk profile of the banks and the Australian banking sector as a whole. This research identified and investigated the different IT services delivery models adopted by the banks by analysing on the relevant literature and documentation available in the public domain in relation to the AFSI. The findings of this research developed a picture of the IT delivery landscape within the banking sector of the AFSI. Findings of this research also demonstrates the complexity of the banks operational environment which can be attributed to the banks’ introduction of their IT multi-sourcing strategies. Finally the findings of this research raise some questions about whether the risks associated with an increasing reliance on IT multi-sourcing to deliver IT services is adequately managed by Australian banking sector and the regulatory framework of APRA

Information Systems Skills Differences between High-Wage and Low-Wage Regions: Implications for Global Sourcing

Developing Information Systems (IS) skills for a company’s workforce has always been challenging, but global sourcing growth has caused the determination of needed IS skills to be more complex. The increased use of outsourcing to an IS service provider and from high-wage regions to low-wage regions has affected what IS skills are required globally and how to distribute the workforce to meet these needs. To understand what skills are needed in locations that seek and those that provide outsourcing, we surveyed IS service provider managers in global locations. Results from 126 reporting units provide empirical evidence that provider units in low-wage regions value technical skills more than those in high-wage regions. Despite the emphasis on commodity skills in low-wage areas, high- and low-wage providers value project management skills. Low-wage regions note global and virtual teamwork more than high-wage regions do. The mix of skills and the variation by region have implications for domestic and offshore sourcing. Service providers can vary their staffing models in global regions which has consequences for recruiting, corporate training, and curriculum

Make or Buy in a mature industry? Models of client-supplier relationships under TCT and RBV perspectives

In this paper, we use the transaction cost theory (TCT) and the resource-based view (RBV) to discuss three propositions on the models of client-supplier relationships in mature industries. The two theories seem to advance different organizational forms of the client-supplier relationships, and in some instances contradictory. How should firms organize to prosper and grow, namely in the international markets? Through the case study of three Portuguese packaging firms, with primary (interviews) and secondary data, we discuss how the three firms deploy three distinct strategic organization models in a mature industry. One firm utilizes market-based governance mechanisms, and concentrates its production in a few selected locations. Another firm vertically integrates almost the entire value chain of the product to provide full service to its clients. The third firm operates in a model of integrated outsourcing, with the installation "wall to wall" to its clients. The models client-supplier assumed by these firms are based on efficient, stable, and trustworthy relationships, that permit the focus on their core competences and the reduction of the transaction costs. Firms? superior performance requires a proper alignment of hierarchical and relational governance taking in consideration the dimensions of the transactions.Client-supplier relationship models; Outsourcing; TCT; RBV; Strategic Governance