The performance implications of outsourcing customer support to service providers in emerging versus established economies

Recent discussions in the business press query the contribution of customer-support outsourcing to firm performance. Despite the controversy surrounding its performance implications, customer-support outsourcing is still on the rise, especially to emerging markets. Against this backdrop, we study under which conditions customer-support outsourcing to providers from emerging versus established economies is more versus less successful. Our performance measure is the stock-market reaction around the outsourcing announcement date. Although customer-support outsourcing is on average evaluated more favorably for providers located in emerging markets as opposed to established economies, approximately 50% of the outsourcing announcements in our sample are evaluated negatively. We find that the shareholder-value implications of customer-support outsourcing to emerging versus established economies are contingent on the nature of the customer support that is being outsourced and on the nature of the outsourcing firm. Customer-support outsourcing to emerging markets is less beneficial for services that are characterized by personal customer contact and high knowledge embeddedness than for customer-support services that involve impersonal customer contact and are low on knowledge embeddedness. Firms higher in marketing resource intensity and larger firms benefit more from outsourcing customer-support services to emerging markets than firms lower in marketing resource intensity and smaller firms

Balancing modularity and solution space freedom:effects on organisational learning and sustainable innovation

\u3cp\u3eMany technology-intensive (TI) firms find it challenging to leverage customisation and achieve sustainable innovation. Although some firms use modularity to tackle this challenge, mixed effects on sustainable innovation have been reported. This study uses organisational learning and ambidexterity theory to provide insights into how TI firms can achieve ‘win-win’ situations where sustainable innovation is increased through customisation. First, we argue that customisation should be viewed two-dimensionally and identify both modularity and solution space freedom as important dimensions. We argue that modularity reflects knowledge specialisation and solution space freedom reflects knowledge variety. Both of these dimensions affect organisational learning and, in turn, sustainable innovation. Second, we argue that the relationship between customisation and organisational learning is affected by supplier characteristics, specifically supplier sophistication. Survey data from 166 managers were used to empirically test the conceptual model and hypotheses. Polynomial response surface analysis confirms that customising by balancing high degrees of both modularity and solution space freedom results in superior organisational learning. High levels of supplier sophistication do not strengthen these effects. Rather, our results show that combining high degrees of modularity with constrained solution spaces increases learning for TI firms working with less sophisticated suppliers. In addition, organisational learning fully mediates the effect of customisation on sustainable product and process innovation.\u3c/p\u3