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The Changing Rationale for Governance Choices: Early vs. Late Adopters of Global Services Sourcing

Published on Aug 1, 2018in Strategic Management Journal 5.57
· DOI :10.1002/smj.2795
Stephan Manning19
Estimated H-index: 19
(University of Massachusetts Boston),
Silvia Massini15
Estimated H-index: 15
(Manchester Institute of Innovation Research)
+ 1 AuthorsArie Y. Lewin38
Estimated H-index: 38
(Duke University)
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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.
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Published on Sep 1, 2015in Journal of International Business Studies 7.72
Stephan Manning19
Estimated H-index: 19
(University of Massachusetts Boston),
Marcus Møller Larsen9
Estimated H-index: 9
(CBS: Copenhagen Business School),
Pratyush Bharati13
Estimated H-index: 13
(University of Massachusetts Boston)
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Constance E. Helfat33
Estimated H-index: 33
(Dartmouth College)
The analysis presented here suggests that the evolution of vertical firm structure depends on contextual factors that differ in their impact across industries and produce different patterns of vertical firm structure. These contextual factors make it possible to account for specific features of the evolution of vertical firm structure using a systematic approach that evaluates the same contextual factors in every industry. The automobile and aluminum industries illustrate how these contextual fa...
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Published on Feb 1, 2015in Journal of International Business Studies 7.72
Carine Peeters12
Estimated H-index: 12
(Katholieke Universiteit Leuven),
Catherine Dehon13
Estimated H-index: 13
(ULB: Université libre de Bruxelles),
Patricia Garcia-Prieto4
Estimated H-index: 4
(ULB: Université libre de Bruxelles)
Contrasting with extant research centred on the organizational challenges of sourcing services in culturally distant countries, we show that cultural differences between home and host countries do not prevent firms from achieving their cost savings targets. Instead, the effect is positive, both for the captive and outsourcing governance models. Using insight from social psychology research and the theory of organizations, we build the argument that the positive effect is due to cultural differen...
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Published on Sep 1, 2014in Organization Studies 3.54
Carine Peeters12
Estimated H-index: 12
(ULB: Université libre de Bruxelles),
Silvia Massini15
Estimated H-index: 15
(University of Manchester),
Arie Y. Lewin38
Estimated H-index: 38
(Duke University)
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Published on Mar 1, 2014in Journal of International Management 2.83
Julien Gooris2
Estimated H-index: 2
(ULB: Université libre de Bruxelles),
Carine Peeters12
Estimated H-index: 12
(ULB: Université libre de Bruxelles)
This paper studies the effect of home–host country distance on the choice of governance mode in service offshoring. Using a Transaction Cost Economics approach, we explore the comparative costs of the hierarchical and contractual models to show that different dimensions of distance (geographic, cultural and institutional), because they generate different types of uncertainties, impact offshore governance choices in different ways. Empirical results confirm that, on the one hand, firms are more l...
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Juan Alcacer15
Estimated H-index: 15
,
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Estimated H-index: 17
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Published on Oct 1, 2013in Industrial and Corporate Change 1.82
Stephan Manning19
Estimated H-index: 19
(University of Massachusetts Boston),
Thomas Hutzschenreuter16
Estimated H-index: 16
(WHU - Otto Beisheim School of Management),
Alexander Strathmann1
Estimated H-index: 1
(WHU - Otto Beisheim School of Management)
This study examines interface management as a dynamic organizational capability supporting an increasing global distribution of knowledge work, based on an in-depth case of an automotive supplier. We show how local responses to experiences of task and interface ambiguity following the relocation of R&D processes may lead to a shift of organizational attention from ex-ante process design to continuous process and interface management. Findings suggest that flexible interface manager positions and...
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Published on Jul 1, 2013in Organization Science 3.26
Rahul Kapoor11
Estimated H-index: 11
(UPenn: University of Pennsylvania)
Although the stylized model of industry evolution suggests that firms transform from vertical integration to specialization over time, many industries still exhibit a continued persistence of integrated firms. In exploring this puzzle, I draw on detailed firm-level data from the semiconductor industry to analyze how integrated incumbents, beyond shifting to the specialized mode, reconfigured in the face of industry’s vertical disintegration so as to coexist with the specialized firms. I propose ...
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Published on May 1, 2013in Strategic Management Journal 5.57
Marcus Møller Larsen9
Estimated H-index: 9
(CBS: Copenhagen Business School),
Stephan Manning19
Estimated H-index: 19
(University of Massachusetts Boston),
Torben Pedersen45
Estimated H-index: 45
(CBS: Copenhagen Business School)
This study investigates estimation errors due to hidden costs — the costs of implementation that are neglected in strategic decision-making processes — in the context of services offshoring. Based on data from the Offshoring Research Network, we find that decision makers are more likely to make cost-estimation errors given increasing configuration and task complexity in captive offshoring and offshore outsourcing, respectively. Moreover, we show that experience and a strong orientation towards o...
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Published on Mar 1, 2013in Research Policy 5.42
Stephan Manning19
Estimated H-index: 19
(University of Massachusetts Boston)
This paper explores knowledge services clusters (KSCs) as a distinct and increasingly important form of geographic cluster, in particular in developing countries: KSCs are defined as geographic concentrations of lower-cost skills serving global demand for increasingly commoditized knowledge services. Based on prior research on clusters and services offshoring, and data from the Offshoring Research Network (ORN), major properties and contingencies of KSC growth are discussed and compared with bot...
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