The Impact of Firm Learning on Financial Value in Strategic Outsourcing Relationships

We investigate whether managers in outsourcing firms, through their prior experience in managing similar strategic alliances and prior association with the provider, learn to create value in their outsourcing relationships. Value creation is estimated in terms of long-term abnormal stock returns to the outsourcing firm relative to an industry, size and book-to-market matched sample of control firms following the implementation of the outsourcing contract, announcement period returns, and allied wealth effects. We find that prior experience and prior association have a significant impact on long-term abnormal stock returns, suggesting that financial markets are slow to price learning effects in outsourcing. Further, while relational learning alone influences value creation in simpler fixed price contracts, both procedural learning through prior experience and relational learning through prior association with the provider have an impact on value creation in variable price contracts. This is because of greater ambiguity in cooperation and coordination between firms that characterizes variable price contracts. The results have implications for management of outsourcing engagements and their performance and valuation

A Conceptual Framework of Reverse Logistics Impact on Firm Performance

This study aims to examine the reverse logistics factors that impact upon firm performance. We review reverse logistics factors under three research streams: (a) resource-based view of the firm, including: Firm strategy, Operations management, and Customer loyalty (b) relational theory, including: Supply chain efficiency, Supply chain collaboration, and institutional theory, including: Government support and Cultural alignment. We measured firm performance with 5 measures: profitability, cost, innovativeness, perceived competitive advantage, and perceived customer satisfaction. We discuss implications for research, policy and practice

Innovation and the geographical and functional dimensions of outsourcing: An empirical investigation based on Italian firm level data

The paper investigates the diversified patterns of outsourcing in the Lombardy region and relates them to the probability of introducing product and process innovation. Based on a large firm-level survey, we show that outsourcing processes are strongly regionally embedded and that offshoring is still a limited phenomenon. Outsourcing strategies are shown to have a positive impact on firms’ innovation. In particular, the outsourcing of service activities contributes the most to innovation, thus suggesting that firms successfully pursue core strengthening strategies. Our econometric estimates show that both geographical and organizational proximity matter. Indeed, the positive association of services with innovation is strongly related to their regional dimension, which points toward the importance of local user-producer relationships. When outsourcing crosses national borders, keeping the outsourced activities at least loosely connected to the firm appears critical, as offshoring to non affiliated firms has a clear negative impact on innovation.Product Innovation, Process Innovation, Outsourcing, Offshoring

Virtual HR Departments: Getting Out of the Middle

In this chapter, we explore the notion of virtual HR departments: a network-based organization built on partnerships and mediated by information technologies in order to be simultaneously strategic, flexible, cost-efficient, and service-oriented. We draw on experiences and initiatives at Merck Pharmaceuticals in order to show how information technology in establishing an infrastructure for virtual HR. Then, we present a model for mapping the architecture of HR activities that includes both internal and external sourcing options. We conclude by offering some recommendations for management practice as well as future research

Domestic Outsourcing in the United States: A Research Agenda to Assess Trends and Effects on Job Quality

The goal of this paper is to develop a comprehensive research agenda to analyze trends in domestic outsourcing in the U.S. -- firms' use of contractors and independent contractors -- and its effects on job quality and inequality. In the process, we review definitions of outsourcing, the available scant empirical research, and limitations of existing data sources. We also summarize theories that attempt to explain why firms contract out for certain functions and assess their predictions about likely impacts on job quality. We then lay out in detail a major research initiative on domestic outsourcing, discussing the questions it should answer and providing a menu of research methodologies and potential data sources. Such a research investment will be a critical resource for policymakers and other stakeholders as they seek solutions to problems arising from the changing nature of work

Implications of Technological Uncertainty on Firm Outsourcing Decisions

Outsourcing inherently considers what activity needs to reside within a given firm. The difficulty of exchanges between firms in the face of uncertainty affects where work on developing and producing new products is performed. Theory is developed and explored using a case study that explains firm sourcing decisions as a response to uncertainty within the context of industry structure and related transaction costs. Viewing outsourcing broadly results in a better delineation of outsourcing options. Implications for management research and practice are identified

Options for Human Capital Acquisition

An \u27options\u27 view of human capital acquisition explains value creation through timedeferred, sequential, path-dependent investment choices and addresses gaps in the resourcebased theory explanation of the relationship between human resources and competitive advantage. Firms will invest in options for human capital, using alternative employment arrangements like temporary/contractual/part-time workers and internships, or by outsourcing the work, when uncertainty associated with human capital is high and investments in human capital are largely irreversible. We discuss various options for skills and employees, two interrelated components of human capital. These are flexibility options, options to wait or defer, options to abandon, learning options, and switching options. The opportunity cost of not having options is quantifiable, which makes the real options approach valuable for strategic HRM decisions

Factors impacting knowledge transfer success in information systems outsourcing

Despite increased research interest on knowledge transfer in information systems (IS) outsourcing, the field still lacks sound and holistic understanding of the key factors influencing knowledge transfer success. The present paper attempts to provide a synthesis of existing theoretical perspectives and empirical findings related to the factors that facilitate or hamper knowledge transfer success in IS outsourcing. The data collection method is discussed and the key findings are presented. Conclusion is drawn and further research is suggested

On Becoming a Strategic Partner: The Role of Human Resources in Gaining Competitive Advantage

Although managers cite human resources as a firm\u27s most important asset, many organizational decisions do not reflect this belief. This paper uses the VRIO (value, rareness, imitability, and organization) framework to examine the role that the Human Resource (HR) function plays in developing a sustainable competitive advantage. We discuss why some popularly cited sources of sustainable competitive advantage are not, and what aspects of a firm\u27s human resources can provide a source of sustainable competitive advantage. We also examine the role of the HR executive as a strategic partner in developing and maintaining competitive advantage within the firm

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