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

The Vulnerability Problem of Business Ecosystems under Global Decoupling

Peer reviewedPostprin

Effects of Cultural Ethnicity, Firm Size, and Firm Age on Senior Executives’ Trust in their Overseas Business Partners: Evidence from China

We investigate trust relationships between senior business executives and their overseas partners. Drawing on the similarity-attraction paradigm, social categorization theory, and the distinction between cognition- and affect-based trust, we argue that executives trust their overseas partners differently, depending on the partners\u27 cultural ethnicity. In a field survey of 108 Chinese senior executives, we found that these executives have higher affect-based trust in overseas partners of the same cultural ethnicity as themselves; cognition-based trust is associated with affect-based trust differently when overseas partners are of the same or different cultural ethnicity. We also examine the role of relative firm size and age in shaping intra- and intercultural trust. Relative firm size has a stronger negative effect on executives\u27 cognition-based trust if their partners are of a different cultural ethnicity. Although firm age does not have a negative effect on executives\u27 affect-based trust as hypothesized, we found firm age to be positively associated with affect-based trust for partners of the same cultural ethnicity. We discuss theoretical and practical implications of this pattern of inter- and intra-cultural trust on international business and networking (guanxi) dynamics in China

Outsourcing and financial performance: A negative curvilinear effect

This study asks how a firm's degree of outsourcing across all activities influences financial performance. We argue there is an optimal degree of outsourcing, where firms outsource some activities yet integrate others, and that deviations lower performance in a negatively curvilinear fashion. We find empirical support, using 1995 and 1998 data on a sample of manufacturing businesses in the Netherlands, and show that the steepness of the curve increases under conditions of high uncertainty. We show the magnitude of the uncertainty effect on performance outcomes through a post hoc scenario analysis. Thus we provide a specific, theoretically and empirically grounded prediction of how outsourcing affects performance with implications for theory and practice

An evolutionary stage model of outsourcing and competence destruction : a Triad comparison of the consumer electronics industry

Outsourcing has gained much prominence in managerial practice and academic discussions in the last two decades or so. Yet, we still do not understand the full implications of outsourcing strategy for corporate performance. Traditionally outsourcing across borders is explained as a cost-cutting exercise, but more recently the core competency argument states that outsourcing also leads to an increased focus, thereby improving effectiveness. However, no general explanation has so far been provided for how outsourcing could lead to deterioration in a firm‟s competence base. We longitudinally analyze three cases of major consumer electronics manufacturers, Emerson Radio from the U.S., Japan‟s Sony and Philips from the Netherlands to understand the dynamic process related to their sourcing strategies. We develop an evolutionary stage model that relates outsourcing to competence development inside the firm and shows that a vicious cycle may emerge. Thus it is appropriate to look not only at how outsourcing is influenced by an organization‟s current set of competences, but also how it alters that set over time. The four stages of the model are offshore sourcing, phasing out, increasing dependence on foreign suppliers, and finally industry exit or outsourcing reduction. The evolutionary stage model helps managers understand for which activities and under which conditions outsourcing across borders is not a viable option. Results suggest that each of these firms had faced a loss of manufacturing competitiveness in its home country, to which it responded by offshoring and then outsourcing production. When a loss of competences occurred, some outsourcing decisions were reversed

A Cross-Cultural Comparison of Business Complaint Management Expectations

This paper is in closed access until 9th Dec 2016.Copyright © Taylor and Francis Group, LLC. This study explores the complaint management expectations of 72 British and 74 German organizational buyers using automated online means-end laddering and a Hierarchical Value Map presentation. It conceptualizes the links between expected complaint resolution attributes by the buyer (i.e., means) and the buyer's value perceptions (i.e., ends). Unlike previous research, we highlight similarities and differences in the drivers behind and attributes of complaint management expectations across two countries (Germany and the United Kingdom). Even in countries appearing to be similar economically and culturally, we find differences in the desired attributes. British buyers, for example, emphasize softer complaint resolution attributes compared to Germans. Our study is the first to present a model of complaint management expectations incorporating the role of culture, and it provides managerial directions on standardization and adaption of complaint resolution attributes. Furthermore, it evaluates justice dimensions (especially interactional justice) and their impact on perceptions of complaint management

A Study on Global Orientation in New Product Development among Small and Medium-Sized Firms

While many small and middle-sized enterprises are entering into emerging markets to satisfy diverse consumer needs, limited attention has been given to global orientation in new product development among these small and middle-sized enterprises in emerging markets. In order to find the antecedents and consequences of this managerial value, we have developed and tested a model of global orientation in new product development among small and middle-sized enterprises. Specifically, we hypothesize that customer orientation and long-term focus have a positive influence on the global orientation among small and middle-sized enterprises, which in turn has a positive effect on performance. Data collected from 482 firms supports the model. Theoretical and managerial implications are discussed.This Research is Supported by Sanhak Foundation Research Grant in 2011

Global marketing management/ Kotabe

xxii, 712 hal. : ill. ; 28 c