The changing rationale for governance choices: Early vs. late adopters of global services sourcing

Abstract

Research Summary: This article studies how the logic of firm governance choices varies as a function of the time of adoption of particular sourcing practices. Using data on the diffusion of global business services sourcing as a management practice from early experiments in the 1980s through 2011, we show that the extent to which governance choices are affected by process commoditization, availability of external service capabilities, and past governance choices depends on whether firms are early or late adopters. Findings inform research on governance choice dynamics specifically in highly diverse and evolving firm populations. Managerial Summary: This article considers how firms have chosen delivery models in global services sourcing decisions over time. Based on comprehensive data, we make two major observations. First, we find that firms that began with global services sourcing early, invested mainly in their internal sourcing capacity, while outsourcing only simple tasks to external providers, whereas firms that started later invested more in their capability to outsource various services to increasingly sophisticated suppliers. Second, we find that initial investments in internal or external sourcing capabilities have a strong effect on future choices of delivery models. This explains why, even today, firms vary greatly in how they implement global sourcing decisions, and it suggests that newcomers should learn from their own peer group rather than from highly experienced firms.

“Of course, cooperation first”: the effect of subsidiary capability and perception gaps for subsidiary development

“…In this process, it means that when a subsidiary performs well, it will attract more cooperation. When a subsidiary has certain capabilities, it can create relational capital (Colakoglu et al , 2014), especially with MNEs and the cooperation among internal units can result in many operational benefits (Gammelgaard et al , 2012; Manning et al , 2018). This study makes three contributions.…”

“…Verbeke et al (2016) argue that subsidiaries of outsider MNEs are disadvantaged compared to insider MNE subsidiaries. Therefore, through internal cooperation (Andersson et al , 2007), the good use of group capabilities (Manning et al , 2018) and the avoidance of PGs between the headquarters and its subsidiaries, even in volatile emerging markets such as China, it will not be difficult to achieve high performance goals.…”

Strategic innovation through outsourcing – A theoretical review

“…A value network perspective provides a theoretical basis for examining the advent of strategic innovation through outsourcing from the client perspective (Manning et al, 2018;Van de Ven, 2005).…”

“…Such developments are due to the commoditization of knowledge work and growing demand for high-skilled, yet lower cost talent (Manning, 2013). Largely due to the explicit nature of technological knowledge (Chatterjee, 2017;Gopal and Gosain, 2010), this commoditization has increased competition among providers (Arora et al, 2001;Davenport, 2005;Manning et al, 2018).…”

Influencing factors of outsourcing in construction projects: a holistic perspective

“…More granular studies show there is a trade-off between coordinated adaption and flexibility when facing high environmental and technological dynamics (Claussen et al, 2015;Toh and Kim, 2013). On the one hand, high dynamic calls for flexibility (Balakrishnan and Wernerfelt, 1986;Geyskens et al, 2006;McCarthy et al, 2010); while outsourcing can provide this convenience, the reward of internalization due to specificity will be undermined (Manning et al, 2018). On the other hand, coordinated adaption is also important to keep up with technical succession.…”