This document summarizes a study examining how small- and medium-sized manufacturing firms in Norway outsource business services. The study finds that firms have different strategies for choosing service providers. Some firms prioritize buying locally to support the local economy, while others do a wide search across regions to find the best option. Additionally, some firms' service relationships are coordinated by a parent company or involve purchased goods. Finally, some firms leave the choice of service providers up to brokers. The study adds new insights into how industrial relationships and outsourcing strategies impact competitiveness.
ASSESSING THE IMPACT OF OUTSOURCING ON ORGANIZATIONAL PERFORMANCE A CASE OF ...Brittany Allen
This document assesses the impact of outsourcing on organizational performance at Vodafone Ghana using both leading and lagging indicators. A literature review revealed theories supporting outsourcing for cost reduction and focusing on core competencies. Empirical studies showed mixed results - outsourcing positively impacted quality of service and knowledge development but showed no significant relationship with financial performance. A quantitative methodology was used to survey Vodafone Ghana employees using stratified random sampling. Statistical analysis found a moderately positive relationship between outsourcing and quality of service as well as knowledge development, but no significant relationship with financial performance.
Understanding outsourcing contexts through information asymmetry and capabili...Ian McCarthy
Outsourcing is a strategic activity that has long been central to operations management research and practice. Yet, there are still many outsourcing management challenges that remain. In this article, we explore two of the outsourcing challenges that motivated this special issue and are central to the 10 articles included. To do this, we develop a theoretical model that examines how variations in capability fit and information asymmetry combine to present firms with four different outsourcing contexts. We then explain how each of the articles included in this special issue relate to our theoretical model and explore several avenues for future research.
Managing costs and delivering savings continues to be a focal
point of the procurement agenda. However, procurement also
has to focus on driving innovation to ultimately help drive
the growth agenda. This is against a backdrop of increasing
regulation that requires more transparency governance and
compliance in ever-increasing competitive markets.
Data Management - Enabling the new procurement agendaTahir Virk
With the exponential rise of data available to businesses, this paper asks the question " Why should Procurement take more ownership of data management".
The paper seeks to identify the business opportunities plus the challenges facing organizations today
If you have not already started on this journey, there is a clear call to action.
Data Management - Enabling the new procurement agendaTahir Virk
1) The document discusses how procurement can take a more active role in managing master data to help drive business value through better data management.
2) It explores how new data sources and business scenarios are creating challenges and opportunities for procurement in areas like innovation, risk management, and compliance. Managing this data effectively requires new approaches.
3) While traditional master data management has faced challenges, new technologies like cognitive computing may help address issues like poor data quality and unlock value from both structured and unstructured data sources. This could better position procurement as a strategic business partner.
Knowledge transfer mechanisms in service business acquisitionsMiia Kosonen
This document discusses knowledge transfer mechanisms in service business acquisitions. It begins with an introduction that knowledge transfer is important for using resources efficiently and transferring best practices. The document then reviews literature on knowledge transfer mechanisms and the specifics of knowledge transfer in services and acquisitions.
The document presents a qualitative study of knowledge transfer mechanisms in one business-to-business service firm that had acquired four other firms. Six knowledge transfer mechanisms were identified: 1) an acquisition management team, 2) unit managers, 3) formal training, 4) "rooming-in", 5) e-communication, and 6) a codified database. These were further classified into management-, learning-, and technology-related mechanisms.
The
. Facility location is an important problem faced by companies in many industries. Finding an optimal
location for facilities and determining their size involves the consideration of many factors, including proximity to customers and suppliers, availability of skilled employees and support services, and cost-related factors, for
example, construction or leasing costs, utility costs, taxes, availability of support services, and others. The demand of the surrounding region plays an important role in location decisions. A high population density may not necessarily cause a proportional demand for products or services. The demography of a region could dictate the demand
for products, and this, in turn, affects a facility’s size and location. The location of a company’s competitors also affects the location of that company’s facilities. Another important aspect in facility location modeling is that many models focus on current demand and do not adequately consider future demand. However, while making location
decisions in an industry in decline, carefully and accurately considering future demand is especially important, and the question in focus is whether to shrink or close down certain facilities with the objective of keeping a certain market share or maximizing profit, especially in a competitive environment. This paper develops a model which enables companies to select sites for their businesses according to their
strategy. The model analyzes the strategic position of the company and forms a guideline for the decision. It investigates which facilities should be closed, (re)opened, shrunk, or expanded. If facilities are to shrink or expand,
the model also determines their new capacities. It depicts the impact on market share and accounts for the costs of closure and reopening. A number of papers deal with location theory and its applications, but few have been written for modeling a competitive environment in the case of declining demand. Existing papers in this area of research are mostly static in nature, do not offer multi-period approaches, nor do they incorporate the behavior of competitors in the market. To demonstrate the validity of the model, it is first solved using a small problem set – three facilities, three demand locations, and three periods – in LINGO solver. To get a better understanding of the model’s behavior, several additional scenarios were constructed. First, the number of demand locations was extended to 10. Our findings show that the model presented provides an extension of existing facility location models that can be applied to a variety of location problems in commercial and industry sectors that need to make their decisions considering future periods and competitors. The developed heuristic shows multiple options for solving the problem, including their advantages and disadvantages, respectively. The Java code and LINGO fragments thus developed can be used to provide easy access to related problems.
Merkl-Davies, Doris M. and Brennan, Niamh M. [2007] Discretionary Disclosure ...Prof Niamh M. Brennan
This paper reviews and synthesizes the literature on discretionary narrative disclosures. We explore why, how, and whether preparers of corporate narrative reports use discretionary disclosures in corporate narrative documents and why, how, and whether users react thereto. To facilitate the review, we provide three taxonomies based on: the motivation for discretionary narrative disclosures (opportunistic behavior, i.e. impression management, versus provision of useful incremental information); the research perspective (preparer versus user); and seven discretionary disclosure strategies.
ASSESSING THE IMPACT OF OUTSOURCING ON ORGANIZATIONAL PERFORMANCE A CASE OF ...Brittany Allen
This document assesses the impact of outsourcing on organizational performance at Vodafone Ghana using both leading and lagging indicators. A literature review revealed theories supporting outsourcing for cost reduction and focusing on core competencies. Empirical studies showed mixed results - outsourcing positively impacted quality of service and knowledge development but showed no significant relationship with financial performance. A quantitative methodology was used to survey Vodafone Ghana employees using stratified random sampling. Statistical analysis found a moderately positive relationship between outsourcing and quality of service as well as knowledge development, but no significant relationship with financial performance.
Understanding outsourcing contexts through information asymmetry and capabili...Ian McCarthy
Outsourcing is a strategic activity that has long been central to operations management research and practice. Yet, there are still many outsourcing management challenges that remain. In this article, we explore two of the outsourcing challenges that motivated this special issue and are central to the 10 articles included. To do this, we develop a theoretical model that examines how variations in capability fit and information asymmetry combine to present firms with four different outsourcing contexts. We then explain how each of the articles included in this special issue relate to our theoretical model and explore several avenues for future research.
Managing costs and delivering savings continues to be a focal
point of the procurement agenda. However, procurement also
has to focus on driving innovation to ultimately help drive
the growth agenda. This is against a backdrop of increasing
regulation that requires more transparency governance and
compliance in ever-increasing competitive markets.
Data Management - Enabling the new procurement agendaTahir Virk
With the exponential rise of data available to businesses, this paper asks the question " Why should Procurement take more ownership of data management".
The paper seeks to identify the business opportunities plus the challenges facing organizations today
If you have not already started on this journey, there is a clear call to action.
Data Management - Enabling the new procurement agendaTahir Virk
1) The document discusses how procurement can take a more active role in managing master data to help drive business value through better data management.
2) It explores how new data sources and business scenarios are creating challenges and opportunities for procurement in areas like innovation, risk management, and compliance. Managing this data effectively requires new approaches.
3) While traditional master data management has faced challenges, new technologies like cognitive computing may help address issues like poor data quality and unlock value from both structured and unstructured data sources. This could better position procurement as a strategic business partner.
Knowledge transfer mechanisms in service business acquisitionsMiia Kosonen
This document discusses knowledge transfer mechanisms in service business acquisitions. It begins with an introduction that knowledge transfer is important for using resources efficiently and transferring best practices. The document then reviews literature on knowledge transfer mechanisms and the specifics of knowledge transfer in services and acquisitions.
The document presents a qualitative study of knowledge transfer mechanisms in one business-to-business service firm that had acquired four other firms. Six knowledge transfer mechanisms were identified: 1) an acquisition management team, 2) unit managers, 3) formal training, 4) "rooming-in", 5) e-communication, and 6) a codified database. These were further classified into management-, learning-, and technology-related mechanisms.
The
. Facility location is an important problem faced by companies in many industries. Finding an optimal
location for facilities and determining their size involves the consideration of many factors, including proximity to customers and suppliers, availability of skilled employees and support services, and cost-related factors, for
example, construction or leasing costs, utility costs, taxes, availability of support services, and others. The demand of the surrounding region plays an important role in location decisions. A high population density may not necessarily cause a proportional demand for products or services. The demography of a region could dictate the demand
for products, and this, in turn, affects a facility’s size and location. The location of a company’s competitors also affects the location of that company’s facilities. Another important aspect in facility location modeling is that many models focus on current demand and do not adequately consider future demand. However, while making location
decisions in an industry in decline, carefully and accurately considering future demand is especially important, and the question in focus is whether to shrink or close down certain facilities with the objective of keeping a certain market share or maximizing profit, especially in a competitive environment. This paper develops a model which enables companies to select sites for their businesses according to their
strategy. The model analyzes the strategic position of the company and forms a guideline for the decision. It investigates which facilities should be closed, (re)opened, shrunk, or expanded. If facilities are to shrink or expand,
the model also determines their new capacities. It depicts the impact on market share and accounts for the costs of closure and reopening. A number of papers deal with location theory and its applications, but few have been written for modeling a competitive environment in the case of declining demand. Existing papers in this area of research are mostly static in nature, do not offer multi-period approaches, nor do they incorporate the behavior of competitors in the market. To demonstrate the validity of the model, it is first solved using a small problem set – three facilities, three demand locations, and three periods – in LINGO solver. To get a better understanding of the model’s behavior, several additional scenarios were constructed. First, the number of demand locations was extended to 10. Our findings show that the model presented provides an extension of existing facility location models that can be applied to a variety of location problems in commercial and industry sectors that need to make their decisions considering future periods and competitors. The developed heuristic shows multiple options for solving the problem, including their advantages and disadvantages, respectively. The Java code and LINGO fragments thus developed can be used to provide easy access to related problems.
Merkl-Davies, Doris M. and Brennan, Niamh M. [2007] Discretionary Disclosure ...Prof Niamh M. Brennan
This paper reviews and synthesizes the literature on discretionary narrative disclosures. We explore why, how, and whether preparers of corporate narrative reports use discretionary disclosures in corporate narrative documents and why, how, and whether users react thereto. To facilitate the review, we provide three taxonomies based on: the motivation for discretionary narrative disclosures (opportunistic behavior, i.e. impression management, versus provision of useful incremental information); the research perspective (preparer versus user); and seven discretionary disclosure strategies.
A Literature Review Of Customer Relationship Management From 2010 To 2014Kim Daniels
This document provides a literature review of customer relationship management (CRM) research from 2010 to 2014. It begins with an introduction that defines CRM and discusses the importance and increasing interest in CRM among academics and businesses. The review then describes the methodology, which used a systematic literature review of CRM articles from various journal databases between 2010-2014. Finally, it previews the findings of the literature analysis, noting some of the major areas of CRM research uncovered at both the organizational and customer levels, as well as the theories and methods frequently or rarely used.
A strategic view of service provider relationships: How to realise value in c...3gamma
Today’s CIOs view IT outsourcing as a strategic tool and no longer only as a means for cost-takeout. 3gamma’s research shows that a majority of IT organisations already have, or are in the process of, entering into second and third generation outsourcing deals. However, to leverage the benefits of specialised capabilities, it is crucial to nurture and manage positive and mutually beneficial relationships. To do this, IT organisations need to take a strategic view on the vendor. They need to identify selected strategic vendor relationships and invest in these to ensure operational efficiency and long-term strategic alignment.
Outsourcing vs insourcing best for your organization (1)IAEME Publication
The document discusses the decision between outsourcing and insourcing for organizations. It provides an overview of factors to consider for each option, including advantages and disadvantages. The key points are:
1. Outsourcing can reduce costs by utilizing more productive external experts, and improve quality by using best practices, but risks losing control. Insourcing maintains control but may not achieve lowest costs.
2. When deciding between outsourcing and insourcing, managers should assess technology/demand trends, the organization's strategic alignment and core competencies, and conduct a total cost analysis of alternatives.
3. If outsourcing, the decision of what to outsource (full operations or partial) depends on
Enterprise Relationships are fundamental to business
success. The research - conducted with Cambridge University Business School - shows how relationships lead to long
term mutual advantage, in which value is largely created by
the quality of interaction between the parties. The overall
performance of a company will therefore depend on how
well it is able to manage its own Enterprise Relationships.
Furthermore the White Paper starts to explore how digital communication can deliver value into these relationships.
Research as a Service: Ripe and Ready for Prime TimeCognizant
Research as a service (RaaS) can be delivered on a full-time equivalent (FTE), managed services or pay-per-use model, depending on a research client's needs for scalability and persistency and the research demands of its business.
The document summarizes six key trends in outsourcing:
1. It's no longer primarily about cost savings but also competitive agility, scalability, and innovation.
2. Nearshoring is becoming more prevalent as outsourcing moves into more strategic activities.
3. Outsourcing is increasingly applied by specific functions like HR, finance, and accounting.
4. Outsourcing is expanding among mid-sized companies who may benefit more from outsourcing than larger firms.
5. Outsourcers and clients are in direct competition for specialized talent as outsourced work moves to more strategic functions.
6. Structures and processes in outsourcing are becoming more formalized through professional
Outsourcing of Regulatory Affairs Tasks in PharmaceuticalAnu Gummerus
The document summarizes a study on the outsourcing of regulatory affairs tasks in the pharmaceutical industry in Europe. The key findings are:
1) The most commonly outsourced regulatory task was translation of product information texts (75% of respondents).
2) The main reason for outsourcing regulatory affairs tasks to Contract Research Organizations (CROs) was the heavy workload in companies' regulatory departments. Ensuring outsourcing is cost-effective was also a key factor.
3) When choosing a CRO partner, companies valued the CRO's experience and knowledge most highly. Personal contacts with the CRO were also often mentioned as important in selecting a partner.
CONCEPTUALTHEORETICAL PAPERCustomer engagement in serviceAlleneMcclendon878
CONCEPTUAL/THEORETICAL PAPER
Customer engagement in service
V. Kumar1,2,3,4 & Bharath Rajan1 & Shaphali Gupta1,5 & Ilaria Dalla Pozza6
Received: 1 February 2017 /Accepted: 20 September 2017 /Published online: 7 October 2017
# Academy of Marketing Science 2017
Abstract We develop a framework to facilitate customer en-
gagement in service (CES) based on the service-dominant (S-
D) logic. A novel feature of this framework is its applicability
and relevance for firms operating both in developed and emerg-
ing markets. First, we conduct a qualitative study involving
service managers from multinational companies (MNCs)
across the developed and emerging markets to understand the
practitioner viewpoints. By integrating the insights from the
interviews and the relevant academic literature, this framework
explores how interaction orientation and omnichannel model
can be used to create positive service experience. We also iden-
tify the factors that moderate the service experience, and
categorize them as follows: offering-related, value-related, en-
abler-related, and market-related. Further, we also propose that
perceived variation in service experience moderates the influ-
ence of service experience on satisfaction and emotional attach-
ment, which ultimately impacts customer engagement (CE).
From these factors, we advance research propositions that dis-
cuss the creation of positive service experience. One of the
study’s key contributions is that MNCs can focus their attention
on the moderators to ensure consistency in positive service
experience, in an effort to enhance CE.
Keywords Service experience . Customer engagement .
Developed markets . Emerging markets . Service-dominant
logic
Introduction
The emergence of service activities globally can be observed
at the firm level through the concept of customer engagement
(CE). In such an environment, engaging with customers has
been recognized as a viable way for enhancing brand and firm
performance (Gartner 2014). For instance, Gallup research
found that on a per-trip basis, Bfully engaged^ customers in
the consumer electronics industry spent $373, compared to
$289 by the Bactively disengaged^ customers (Sorenson and
Adkins 2014). With financial performance at stake, service
firms would, therefore, be more inclined to engage with their
customers.
Research studies have identified CE as a key success factor
for firms (Kumar and Pansari 2016; Verhoef et al. 2010). In
this regard, value contribution from customers to the firms
extends beyond just purchases transactions to also include
non-purchase related customer behaviors (Kumar and
Reinartz 2016). All these ways of customer value contribution
Satish Jayachandran served as Area Editor for this article.
* V. Kumar
[email protected]
Bharath Rajan
[email protected]
Shaphali Gupta
[email protected]
Ilaria Dalla Pozza
[email protected]
1 Center for Excellence in Brand & Customer Management, J. Mack
Robinson College of Business, Georgia State Univ ...
Strengthening Supplier Partnerships Global Pharmaceutical Optimizes FM Capabi...Trascent
CHALLENGE:
Establish New Sourcing Strategy, Operational Model & FM Team A global pharmaceutical company sought a stronger facilities management (FM) function across its global footprint, which encompassed more than 30 million square feet of space in 75+ countries. The sites included offices, lab and research facilities, data centers, large mixed-use campuses and manufacturing plants. Specifically, the company needed to establish an effective global FM organization and stronger FM practices to meet employee and business needs in key regions around the world.
Next generation IT outsourcing and the global enterprise model (GEM)WGroup
Disruptive technologies such as cloud computing and the “as-a-service” model for software, infrastructure and platforms have led to fundamental changes in how IT services are organized, managed and delivered—whether they are outsourced, insourced or a combination. The reality that IT services can be delivered to anywhere on the globe via the “Cloud” has accelerated the commoditization of IT. Ubiquitous access to IT services has lessened business units’ dependency on internal IT and shifted the IT organization’s prime role from process excellence to technology and service innovation. This article discusses through WGroup's perspective how outsourcing can create value through changing the way business is done.
Kocg9696sixkeytrendsinoutsourcingebook 130924055917-phpapp01자영 이
Six key trends in outsourcing are summarized:
1. Outsourcing is no longer primarily about cost savings but also about competitive agility, scalability, and innovation.
2. Near-shoring to locations with similar time zones and cultures is becoming more common to gain efficiencies while maintaining quality.
3. Outsourcing is being applied to more strategic functions like finance, HR, and customer relations management.
4. Mid-sized companies are expanding outsourcing more than larger firms to reduce costs and improve compliance.
5. Outsourcers and clients directly compete for talent as outsourced work moves to more specialized, strategic roles.
6. Industry structures and processes are becoming more
Kocg9696sixkeytrendsinoutsourcingebook 130924055917-phpapp01자영 이
Six key trends in outsourcing are summarized:
1. Outsourcing is no longer primarily about cost savings but also about competitive agility, scalability, and innovation.
2. Near-shoring to locations with similar time zones and cultures is becoming more common to gain efficiencies while maintaining quality.
3. Outsourcing is being applied to more strategic functions like finance, HR, and customer relations management.
4. Mid-sized companies are expanding outsourcing more than larger firms to reduce costs and improve operations.
5. Outsourcers and clients directly compete for talent as outsourced work moves to more specialized, strategic roles.
6. Industry structures and processes are becoming more
The document discusses strategic consulting services for life science R&D. It provides an assessment of 13 major consulting service providers in this area based on criteria like the breadth and depth of their life science experience, industry knowledge, client references, and ability to deliver integrated solutions. Premier life science companies seek strategic consulting partners that can provide traditional management expertise plus deep industry insights and help implement projects end-to-end. Selecting the right vendor is important to efficiently transform organizations.
Capita - Putting innovation at the heart of RPOEmma Mirrington
What is the meaning of innovation in RPO and how can the market become more innovative? New research from Capita seeks to find out what innovation means to resourcing leaders. The research provides an in depth insight on how RPO models can be better configured to realise the benefits from innovation.
Research participants included HR directors and resourcing leaders from large enterprises, with the likes of Arup, BSkyB, The Cooperative Banking Group, Lockheed Martin, TalkTalk, Thales and Virgin Money, among others.
Most of the respondents felt that the sector needed to improve on how it engages with candidates and hiring managers, and improve its capabilities around candidate sourcing. There was a strong sense of a need for research-led RPO, which could help improve conversations with active and passive candidates as well as boost the development of talent pipelines and pools.
Some respondents reflected challenges back on themselves; for instance, respondents linked several shortfalls to their organisations’ tendency to contract on cost alone, a failure to challenge how resourcing was perceived as a business discipline within their own organisation, and a lack of both focus and investment in workforce planning and talent management.
The Innovation in RPO white paper proves to be an interesting and upfront read. Its frank and honest view of the state of RPO comes with recommendations for driving positive change.
Operations Research Significance to Human factors and Environmental Considera...inventionjournals
There are a ton of techniques which are applicable to this present reality area/designation - relocation problems. Typically the results of those techniques have depended upon a gathering of criteria that are one of a kind to each problem separately. The conventional way more often than not utilizes cost minimization or benefit expansion models. Ordinarily, the area assignment problem concerns itself with the exchange off between the expense of building and operating facilities to take care of item demand and the expense of transportation among numerous others. Studies made in the past have uncovered that the essential variables of site choice all together of importance classification were labour availability, site accessibility and nearness to the interest destinations. In these days the circumstance is changed, factors like environmental consideration, labour quality, accessibility of utilities and personal satisfaction are the primary location considerations. From the previously mentioned it is unmistakably obvious that unadulterated cost minimization or benefit expansion models are no more as pertinent in today's vitality and environment conscious time. Dismissal of elements like life quality, pollution control, safeguarding of assets and stylish parameters could hurt the manufacturing capabilities lastly could prompt unusual results by expansion to operating costs considerably more than tax cuts, low wages or transportation costs subtract.
The Hazards of Sole Sourcing RelationshipsChallenges, Pract.docxarnoldmeredith47041
The Hazards of Sole Sourcing Relationships:
Challenges, Practices, and Insights
Mark O. Lewis, Appalachian State University
Scott D. Hayward, Appalachian State University
Vijay Kasi, AT Kearney's Supply Chain Practice
Introduction
Fueled by advances in information technology,
supply chain management has moved from a
back office administrative function to a board
room imperative. Today, companies work more
closely with their suppliers to be more respon-
sive to customers' changing needs and to build
competitiveness. Many firms have significantly
reduced the number of suppliers they use,
sometimes to a single, trusted source to enable
tight integration between firms. Operations
management scholars continue to examine the
effects of tight supplier integration and often
point to the positive relationship between in-
tegration and performance (Handfield, Ragatz,
Peterson, and Monczka, 1999; Kulp, Lee, and
Ofek, 2004; Rosenzweig, Roth, and Dean Jr,
2003). With a relationship built on a foundation
of trust, single supplier relationships potentially
offer many benefits. The buyer and a single
supplier can better coordinate shipments and
production, share technological knowledge to
integrate the input into production, and com-
municate design changes to mutual benefit.
Multiple sourcing, in contrast, may weaken the
ties between the firm and its suppliers making
communication, control, and standardization
more difficult.
Though the potential benefits of single sourc-
ing and tight integration are many, the strategy
has its drawbacks. For example, Horwitch and
Thietart (1987) uncovered the costs of coordina-
tion, compromise, and rigidity that may follow
from especially tight firm-supplier relationships.
Similarly, Das (2006) argued that the increased
virtual span of control stemming from tight inte-
gration may lead to coordination costs that offset
savings incurred from single-sourced relation-
ships. In addition to the explicit costs of integra-
tion, Sorenson (2003) focused on other costs of
tight integration that were less measurable, such
as the absence of learning that may come from
limiting a firm's contact with its external envi-
ronment. Clearly, management scholars disagree
about the utility of developing tight firm-supplier
relationships, such as those that might arise from
sole sourcing strategies.
Against this backdrop, this paper offers two
core contributions. First, while grounded in a
real life case study of a large consumer products
company, it offers a theoretical explanation of
the perils of single-sourcing relationships. In
doing so, it shows the actual drivers of bound-
ary drift, a term we develop to represent the
change in organizational boundaries that result
from sourcing decisions. Furthermore, we show
how such a phenomenon can lead to unintended,
and potentially detrimental, strategic outcomes.
Second, by following the focal firm as they
design a new sourcing strategy, we offer impor-
tant insights for practicing manage.
The document discusses outsourcing and its impact on jobs and the economy in the United States. It notes that over 14 million American jobs are at risk of being outsourced offshore, making it difficult for recent college graduates to find work. While outsourcing was once concentrated in minimum wage labor jobs, it now includes white collar jobs in fields like IT, accounting, and architecture. As more jobs are sent overseas, there are fewer opportunities for American workers, damaging the economy. The outsourcing of jobs is contributing to the lack of jobs available for college graduates in the United States.
Research report the driver of supply management capability Tran Thang
The main purpose of the paper is to identify the driver factors have effect to supply management capability. Many previous studies involve supply management capability have been mainly concern about general competences and individual skill lists which is considered necessary for the professionals to achieve an efficient procurement system. There are little concentration on the drivers of capability in supply management. This paper point out that if the corporations want to increase supply management capability it is crucial to link the role of purchasing and supply management to the strategy of the corporation, formalize the supply management functions and promote the suppliers network values and suppliers orientation to their business.
This literature review summarizes research on why multi-national corporations regionalize their branches. It discusses models of organizational decision making and identifies awareness, analysis, and action as key phases. It defines multi-national corporations and examines forces like local differentiation, global integration, and worldwide innovation that shape MNC strategy. The review also explores Hofstede's cultural dimensions model and its insights into how national culture can impact regionalization decisions. Finally, it touches on theories of corporate restructuring and argues MNCs restructure to achieve alignment, economies of scale, and respond to competition through diversification or refocusing of strategy.
The document summarizes a research paper that analyzes how the design of information capabilities impacts business process outsourcing performance. It begins by explaining that BPO involves outsourcing business processes to external providers, with the goals ranging from cost reduction to innovation. Each outsourced process has unique information requirements depending on attributes like analyzability and dynamism. The research aims to apply the information processing view to theorize that BPO performance depends on designing information capabilities that fit the specific information requirements of the outsourced process. An empirical study of 127 BPO relationships finds support for the hypothesis that satisfaction increases when there is a fit between information requirements and capabilities, and decreases when there is a misfit.
This document summarizes a research article that studied how the degree of outsourcing a new technology affects a firm's ability to integrate that technology into its business processes and leverage it in the marketplace. The study found that greater reliance on outsourcing can reduce a firm's learning and investment in developing capabilities to use the new technology. As a result, outsourcing can negatively impact a firm's integrative capabilities and customer adoption of the technology. However, firms with prior related experience were found to be less negatively impacted by outsourcing.
A Literature Review Of Customer Relationship Management From 2010 To 2014Kim Daniels
This document provides a literature review of customer relationship management (CRM) research from 2010 to 2014. It begins with an introduction that defines CRM and discusses the importance and increasing interest in CRM among academics and businesses. The review then describes the methodology, which used a systematic literature review of CRM articles from various journal databases between 2010-2014. Finally, it previews the findings of the literature analysis, noting some of the major areas of CRM research uncovered at both the organizational and customer levels, as well as the theories and methods frequently or rarely used.
A strategic view of service provider relationships: How to realise value in c...3gamma
Today’s CIOs view IT outsourcing as a strategic tool and no longer only as a means for cost-takeout. 3gamma’s research shows that a majority of IT organisations already have, or are in the process of, entering into second and third generation outsourcing deals. However, to leverage the benefits of specialised capabilities, it is crucial to nurture and manage positive and mutually beneficial relationships. To do this, IT organisations need to take a strategic view on the vendor. They need to identify selected strategic vendor relationships and invest in these to ensure operational efficiency and long-term strategic alignment.
Outsourcing vs insourcing best for your organization (1)IAEME Publication
The document discusses the decision between outsourcing and insourcing for organizations. It provides an overview of factors to consider for each option, including advantages and disadvantages. The key points are:
1. Outsourcing can reduce costs by utilizing more productive external experts, and improve quality by using best practices, but risks losing control. Insourcing maintains control but may not achieve lowest costs.
2. When deciding between outsourcing and insourcing, managers should assess technology/demand trends, the organization's strategic alignment and core competencies, and conduct a total cost analysis of alternatives.
3. If outsourcing, the decision of what to outsource (full operations or partial) depends on
Enterprise Relationships are fundamental to business
success. The research - conducted with Cambridge University Business School - shows how relationships lead to long
term mutual advantage, in which value is largely created by
the quality of interaction between the parties. The overall
performance of a company will therefore depend on how
well it is able to manage its own Enterprise Relationships.
Furthermore the White Paper starts to explore how digital communication can deliver value into these relationships.
Research as a Service: Ripe and Ready for Prime TimeCognizant
Research as a service (RaaS) can be delivered on a full-time equivalent (FTE), managed services or pay-per-use model, depending on a research client's needs for scalability and persistency and the research demands of its business.
The document summarizes six key trends in outsourcing:
1. It's no longer primarily about cost savings but also competitive agility, scalability, and innovation.
2. Nearshoring is becoming more prevalent as outsourcing moves into more strategic activities.
3. Outsourcing is increasingly applied by specific functions like HR, finance, and accounting.
4. Outsourcing is expanding among mid-sized companies who may benefit more from outsourcing than larger firms.
5. Outsourcers and clients are in direct competition for specialized talent as outsourced work moves to more strategic functions.
6. Structures and processes in outsourcing are becoming more formalized through professional
Outsourcing of Regulatory Affairs Tasks in PharmaceuticalAnu Gummerus
The document summarizes a study on the outsourcing of regulatory affairs tasks in the pharmaceutical industry in Europe. The key findings are:
1) The most commonly outsourced regulatory task was translation of product information texts (75% of respondents).
2) The main reason for outsourcing regulatory affairs tasks to Contract Research Organizations (CROs) was the heavy workload in companies' regulatory departments. Ensuring outsourcing is cost-effective was also a key factor.
3) When choosing a CRO partner, companies valued the CRO's experience and knowledge most highly. Personal contacts with the CRO were also often mentioned as important in selecting a partner.
CONCEPTUALTHEORETICAL PAPERCustomer engagement in serviceAlleneMcclendon878
CONCEPTUAL/THEORETICAL PAPER
Customer engagement in service
V. Kumar1,2,3,4 & Bharath Rajan1 & Shaphali Gupta1,5 & Ilaria Dalla Pozza6
Received: 1 February 2017 /Accepted: 20 September 2017 /Published online: 7 October 2017
# Academy of Marketing Science 2017
Abstract We develop a framework to facilitate customer en-
gagement in service (CES) based on the service-dominant (S-
D) logic. A novel feature of this framework is its applicability
and relevance for firms operating both in developed and emerg-
ing markets. First, we conduct a qualitative study involving
service managers from multinational companies (MNCs)
across the developed and emerging markets to understand the
practitioner viewpoints. By integrating the insights from the
interviews and the relevant academic literature, this framework
explores how interaction orientation and omnichannel model
can be used to create positive service experience. We also iden-
tify the factors that moderate the service experience, and
categorize them as follows: offering-related, value-related, en-
abler-related, and market-related. Further, we also propose that
perceived variation in service experience moderates the influ-
ence of service experience on satisfaction and emotional attach-
ment, which ultimately impacts customer engagement (CE).
From these factors, we advance research propositions that dis-
cuss the creation of positive service experience. One of the
study’s key contributions is that MNCs can focus their attention
on the moderators to ensure consistency in positive service
experience, in an effort to enhance CE.
Keywords Service experience . Customer engagement .
Developed markets . Emerging markets . Service-dominant
logic
Introduction
The emergence of service activities globally can be observed
at the firm level through the concept of customer engagement
(CE). In such an environment, engaging with customers has
been recognized as a viable way for enhancing brand and firm
performance (Gartner 2014). For instance, Gallup research
found that on a per-trip basis, Bfully engaged^ customers in
the consumer electronics industry spent $373, compared to
$289 by the Bactively disengaged^ customers (Sorenson and
Adkins 2014). With financial performance at stake, service
firms would, therefore, be more inclined to engage with their
customers.
Research studies have identified CE as a key success factor
for firms (Kumar and Pansari 2016; Verhoef et al. 2010). In
this regard, value contribution from customers to the firms
extends beyond just purchases transactions to also include
non-purchase related customer behaviors (Kumar and
Reinartz 2016). All these ways of customer value contribution
Satish Jayachandran served as Area Editor for this article.
* V. Kumar
[email protected]
Bharath Rajan
[email protected]
Shaphali Gupta
[email protected]
Ilaria Dalla Pozza
[email protected]
1 Center for Excellence in Brand & Customer Management, J. Mack
Robinson College of Business, Georgia State Univ ...
Strengthening Supplier Partnerships Global Pharmaceutical Optimizes FM Capabi...Trascent
CHALLENGE:
Establish New Sourcing Strategy, Operational Model & FM Team A global pharmaceutical company sought a stronger facilities management (FM) function across its global footprint, which encompassed more than 30 million square feet of space in 75+ countries. The sites included offices, lab and research facilities, data centers, large mixed-use campuses and manufacturing plants. Specifically, the company needed to establish an effective global FM organization and stronger FM practices to meet employee and business needs in key regions around the world.
Next generation IT outsourcing and the global enterprise model (GEM)WGroup
Disruptive technologies such as cloud computing and the “as-a-service” model for software, infrastructure and platforms have led to fundamental changes in how IT services are organized, managed and delivered—whether they are outsourced, insourced or a combination. The reality that IT services can be delivered to anywhere on the globe via the “Cloud” has accelerated the commoditization of IT. Ubiquitous access to IT services has lessened business units’ dependency on internal IT and shifted the IT organization’s prime role from process excellence to technology and service innovation. This article discusses through WGroup's perspective how outsourcing can create value through changing the way business is done.
Kocg9696sixkeytrendsinoutsourcingebook 130924055917-phpapp01자영 이
Six key trends in outsourcing are summarized:
1. Outsourcing is no longer primarily about cost savings but also about competitive agility, scalability, and innovation.
2. Near-shoring to locations with similar time zones and cultures is becoming more common to gain efficiencies while maintaining quality.
3. Outsourcing is being applied to more strategic functions like finance, HR, and customer relations management.
4. Mid-sized companies are expanding outsourcing more than larger firms to reduce costs and improve compliance.
5. Outsourcers and clients directly compete for talent as outsourced work moves to more specialized, strategic roles.
6. Industry structures and processes are becoming more
Kocg9696sixkeytrendsinoutsourcingebook 130924055917-phpapp01자영 이
Six key trends in outsourcing are summarized:
1. Outsourcing is no longer primarily about cost savings but also about competitive agility, scalability, and innovation.
2. Near-shoring to locations with similar time zones and cultures is becoming more common to gain efficiencies while maintaining quality.
3. Outsourcing is being applied to more strategic functions like finance, HR, and customer relations management.
4. Mid-sized companies are expanding outsourcing more than larger firms to reduce costs and improve operations.
5. Outsourcers and clients directly compete for talent as outsourced work moves to more specialized, strategic roles.
6. Industry structures and processes are becoming more
The document discusses strategic consulting services for life science R&D. It provides an assessment of 13 major consulting service providers in this area based on criteria like the breadth and depth of their life science experience, industry knowledge, client references, and ability to deliver integrated solutions. Premier life science companies seek strategic consulting partners that can provide traditional management expertise plus deep industry insights and help implement projects end-to-end. Selecting the right vendor is important to efficiently transform organizations.
Capita - Putting innovation at the heart of RPOEmma Mirrington
What is the meaning of innovation in RPO and how can the market become more innovative? New research from Capita seeks to find out what innovation means to resourcing leaders. The research provides an in depth insight on how RPO models can be better configured to realise the benefits from innovation.
Research participants included HR directors and resourcing leaders from large enterprises, with the likes of Arup, BSkyB, The Cooperative Banking Group, Lockheed Martin, TalkTalk, Thales and Virgin Money, among others.
Most of the respondents felt that the sector needed to improve on how it engages with candidates and hiring managers, and improve its capabilities around candidate sourcing. There was a strong sense of a need for research-led RPO, which could help improve conversations with active and passive candidates as well as boost the development of talent pipelines and pools.
Some respondents reflected challenges back on themselves; for instance, respondents linked several shortfalls to their organisations’ tendency to contract on cost alone, a failure to challenge how resourcing was perceived as a business discipline within their own organisation, and a lack of both focus and investment in workforce planning and talent management.
The Innovation in RPO white paper proves to be an interesting and upfront read. Its frank and honest view of the state of RPO comes with recommendations for driving positive change.
Operations Research Significance to Human factors and Environmental Considera...inventionjournals
There are a ton of techniques which are applicable to this present reality area/designation - relocation problems. Typically the results of those techniques have depended upon a gathering of criteria that are one of a kind to each problem separately. The conventional way more often than not utilizes cost minimization or benefit expansion models. Ordinarily, the area assignment problem concerns itself with the exchange off between the expense of building and operating facilities to take care of item demand and the expense of transportation among numerous others. Studies made in the past have uncovered that the essential variables of site choice all together of importance classification were labour availability, site accessibility and nearness to the interest destinations. In these days the circumstance is changed, factors like environmental consideration, labour quality, accessibility of utilities and personal satisfaction are the primary location considerations. From the previously mentioned it is unmistakably obvious that unadulterated cost minimization or benefit expansion models are no more as pertinent in today's vitality and environment conscious time. Dismissal of elements like life quality, pollution control, safeguarding of assets and stylish parameters could hurt the manufacturing capabilities lastly could prompt unusual results by expansion to operating costs considerably more than tax cuts, low wages or transportation costs subtract.
The Hazards of Sole Sourcing RelationshipsChallenges, Pract.docxarnoldmeredith47041
The Hazards of Sole Sourcing Relationships:
Challenges, Practices, and Insights
Mark O. Lewis, Appalachian State University
Scott D. Hayward, Appalachian State University
Vijay Kasi, AT Kearney's Supply Chain Practice
Introduction
Fueled by advances in information technology,
supply chain management has moved from a
back office administrative function to a board
room imperative. Today, companies work more
closely with their suppliers to be more respon-
sive to customers' changing needs and to build
competitiveness. Many firms have significantly
reduced the number of suppliers they use,
sometimes to a single, trusted source to enable
tight integration between firms. Operations
management scholars continue to examine the
effects of tight supplier integration and often
point to the positive relationship between in-
tegration and performance (Handfield, Ragatz,
Peterson, and Monczka, 1999; Kulp, Lee, and
Ofek, 2004; Rosenzweig, Roth, and Dean Jr,
2003). With a relationship built on a foundation
of trust, single supplier relationships potentially
offer many benefits. The buyer and a single
supplier can better coordinate shipments and
production, share technological knowledge to
integrate the input into production, and com-
municate design changes to mutual benefit.
Multiple sourcing, in contrast, may weaken the
ties between the firm and its suppliers making
communication, control, and standardization
more difficult.
Though the potential benefits of single sourc-
ing and tight integration are many, the strategy
has its drawbacks. For example, Horwitch and
Thietart (1987) uncovered the costs of coordina-
tion, compromise, and rigidity that may follow
from especially tight firm-supplier relationships.
Similarly, Das (2006) argued that the increased
virtual span of control stemming from tight inte-
gration may lead to coordination costs that offset
savings incurred from single-sourced relation-
ships. In addition to the explicit costs of integra-
tion, Sorenson (2003) focused on other costs of
tight integration that were less measurable, such
as the absence of learning that may come from
limiting a firm's contact with its external envi-
ronment. Clearly, management scholars disagree
about the utility of developing tight firm-supplier
relationships, such as those that might arise from
sole sourcing strategies.
Against this backdrop, this paper offers two
core contributions. First, while grounded in a
real life case study of a large consumer products
company, it offers a theoretical explanation of
the perils of single-sourcing relationships. In
doing so, it shows the actual drivers of bound-
ary drift, a term we develop to represent the
change in organizational boundaries that result
from sourcing decisions. Furthermore, we show
how such a phenomenon can lead to unintended,
and potentially detrimental, strategic outcomes.
Second, by following the focal firm as they
design a new sourcing strategy, we offer impor-
tant insights for practicing manage.
The document discusses outsourcing and its impact on jobs and the economy in the United States. It notes that over 14 million American jobs are at risk of being outsourced offshore, making it difficult for recent college graduates to find work. While outsourcing was once concentrated in minimum wage labor jobs, it now includes white collar jobs in fields like IT, accounting, and architecture. As more jobs are sent overseas, there are fewer opportunities for American workers, damaging the economy. The outsourcing of jobs is contributing to the lack of jobs available for college graduates in the United States.
Research report the driver of supply management capability Tran Thang
The main purpose of the paper is to identify the driver factors have effect to supply management capability. Many previous studies involve supply management capability have been mainly concern about general competences and individual skill lists which is considered necessary for the professionals to achieve an efficient procurement system. There are little concentration on the drivers of capability in supply management. This paper point out that if the corporations want to increase supply management capability it is crucial to link the role of purchasing and supply management to the strategy of the corporation, formalize the supply management functions and promote the suppliers network values and suppliers orientation to their business.
This literature review summarizes research on why multi-national corporations regionalize their branches. It discusses models of organizational decision making and identifies awareness, analysis, and action as key phases. It defines multi-national corporations and examines forces like local differentiation, global integration, and worldwide innovation that shape MNC strategy. The review also explores Hofstede's cultural dimensions model and its insights into how national culture can impact regionalization decisions. Finally, it touches on theories of corporate restructuring and argues MNCs restructure to achieve alignment, economies of scale, and respond to competition through diversification or refocusing of strategy.
The document summarizes a research paper that analyzes how the design of information capabilities impacts business process outsourcing performance. It begins by explaining that BPO involves outsourcing business processes to external providers, with the goals ranging from cost reduction to innovation. Each outsourced process has unique information requirements depending on attributes like analyzability and dynamism. The research aims to apply the information processing view to theorize that BPO performance depends on designing information capabilities that fit the specific information requirements of the outsourced process. An empirical study of 127 BPO relationships finds support for the hypothesis that satisfaction increases when there is a fit between information requirements and capabilities, and decreases when there is a misfit.
This document summarizes a research article that studied how the degree of outsourcing a new technology affects a firm's ability to integrate that technology into its business processes and leverage it in the marketplace. The study found that greater reliance on outsourcing can reduce a firm's learning and investment in developing capabilities to use the new technology. As a result, outsourcing can negatively impact a firm's integrative capabilities and customer adoption of the technology. However, firms with prior related experience were found to be less negatively impacted by outsourcing.
This document summarizes a research paper that analyzes how the design of information capabilities impacts business process outsourcing (BPO) performance. The paper builds on the information processing view of the firm to argue that BPO performance depends on ensuring a fit between the information requirements of the outsourced process and the information capabilities provided in the relationship. Using survey data from 127 BPO relationships, the paper finds that satisfaction is significantly higher when there is a fit between information requirements and capabilities, and lower in cases of misfit. The results suggest that BPO relationships need to be designed and managed with consideration for the specific information needs of the outsourced process in order to realize performance gains.
This article examines the relationship between offshoring R&D activities and firm innovation performance. It distinguishes between two models of offshoring - captive offshoring, where R&D is performed within a foreign subsidiary, and offshore outsourcing, where R&D is contracted to an external provider abroad. It also distinguishes between two types of innovation outcomes - product and process innovations. The article hypothesizes that R&D offshoring will have different impacts depending on the innovation outcome and offshoring model. An empirical analysis of Spanish firms from 2004-2007 provides support for the hypotheses and indicates offshoring can enhance innovation, particularly for product innovations and under captive offshoring arrangements.
This document summarizes a research article that examines how trust in an outsourced customer relationship management (CRM) supplier influences organizational learning processes and firm performance within the buyer firm. The study found that trust in the outsourced CRM supplier positively impacts information sharing within the buyer firm, which then positively impacts information interpretation and access. These organizational learning processes were found to positively influence customer satisfaction/retention and market performance for the buyer firm. Effective information sharing, integration, and accessibility were identified as critical for CRM success, regardless of whether the CRM function is outsourced or conducted in-house.
This document summarizes a study that explores the relationship between IT outsourcing (ITO) and business and IT alignment. The study aims to provide recommendations for how outsourcing relationships can support business and IT alignment. Through a literature review and analysis of four case studies, the study found that higher levels of motivation for outsourcing, relationship between outsourcer and provider, and alignment maturity of the outsourcer can lead to positive effects of ITO on business and IT alignment. Organizational turbulence on either side can negatively impact the relationship. Service providers also tended to assess relationships more positively than outsourcers.
This document discusses business process reengineering (BPR) for flexibility and innovation in manufacturing. It argues that incremental improvements alone are not sufficient to gain a competitive advantage in today's global marketplace. Organizations must fundamentally rethink and redesign their core business processes from an integrated, value chain perspective. BPR aims for radical, dramatic improvements over continuous improvement approaches through cross-functional process orientation and redesign. The document emphasizes that BPR requires organizational structure, goals, measurements, and employee work to change from functional to process-oriented in order to achieve flexibility and innovation.
This document summarizes a study examining how small- and medium-sized manufacturing firms in Norway outsource business services. The study finds that firms have different strategies for choosing service providers. Some firms prioritize buying locally to support the local economy, while others do a wide search across regions to find the best option. Additionally, some firms' service relationships are coordinated by a parent company or involve purchased goods. Finally, some firms leave the choice of service providers up to brokers. The study adds new insights into how industrial relationships and outsourcing strategies impact competitiveness.
This type of entrepreneur works for someone else and helps them develop
their business ideas. They are not the primary owners of the business.
2. The
Intrapreneur: This type of entrepreneur works within an existing company and helps
develop new ideas, products or services for that company. They are employees but act with
an entrepreneurial spirit.
3. The
Business Owner: This type of entrepreneur starts their own business from scratch. They
are the primary owners and are responsible for all aspects of starting and running the
business.
Some key types of entrepreneurs include:
- Lifestyle Entrepreneurs: They start businesses to support their desired lifestyle rather than
high growth.
Life skills-assessment-div.-of-childrenTesfish Hailu
The document provides instructions for completing a Life Skills Inventory assessment tool for youth in foster care. It explains that the assessment should involve the youth, social worker, caregiver and others knowledgeable about the youth's skills. Scoring is based on the lowest level of completion demonstrated by the youth across different life skill categories including money management, food, health, housekeeping, and others. The assessment is to be completed when youth are 15-16 years old.
Diversity in the workplace can be both beneficial and challenging if not managed properly. While diversity has the potential to increase productivity and competitive advantage through new perspectives, unmanaged diversity may become an obstacle to achieving organizational goals. The rise of diversity is largely due to factors like globalization, which allows organizations to expand worldwide, and migration, both of which contribute to a more culturally diverse workforce.
Physiology and chemistry of skin and pigmentation, hairs, scalp, lips and nail, Cleansing cream, Lotions, Face powders, Face packs, Lipsticks, Bath products, soaps and baby product,
Preparation and standardization of the following : Tonic, Bleaches, Dentifrices and Mouth washes & Tooth Pastes, Cosmetics for Nails.
How to Fix the Import Error in the Odoo 17Celine George
An import error occurs when a program fails to import a module or library, disrupting its execution. In languages like Python, this issue arises when the specified module cannot be found or accessed, hindering the program's functionality. Resolving import errors is crucial for maintaining smooth software operation and uninterrupted development processes.
Main Java[All of the Base Concepts}.docxadhitya5119
This is part 1 of my Java Learning Journey. This Contains Custom methods, classes, constructors, packages, multithreading , try- catch block, finally block and more.
Executive Directors Chat Leveraging AI for Diversity, Equity, and InclusionTechSoup
Let’s explore the intersection of technology and equity in the final session of our DEI series. Discover how AI tools, like ChatGPT, can be used to support and enhance your nonprofit's DEI initiatives. Participants will gain insights into practical AI applications and get tips for leveraging technology to advance their DEI goals.
A Strategic Approach: GenAI in EducationPeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
Macroeconomics- Movie Location
This will be used as part of your Personal Professional Portfolio once graded.
Objective:
Prepare a presentation or a paper using research, basic comparative analysis, data organization and application of economic information. You will make an informed assessment of an economic climate outside of the United States to accomplish an entertainment industry objective.
Assessment and Planning in Educational technology.pptxKavitha Krishnan
In an education system, it is understood that assessment is only for the students, but on the other hand, the Assessment of teachers is also an important aspect of the education system that ensures teachers are providing high-quality instruction to students. The assessment process can be used to provide feedback and support for professional development, to inform decisions about teacher retention or promotion, or to evaluate teacher effectiveness for accountability purposes.
1. GEOGRAPHY OF OUTSOURCING: BUSINESS
SERVICE PROVISIONS AMONG FIRMS IN
NORWAY
GRETE RUSTEN
Foundation for Research in Economics and Business Administration (SNF), Breiviksveien 40, N-5045
Bergen-Sandviken, Norway. E-mail: Grete.Rusten@snf.no
Received: March 1999; revised November 1999
ABSTRACT
This paper examines how business service provision partly relies on user firms' internal
resources, strategies and location depending on what can be obtained locally or is feasible to
import elsewhere. Empirical evidence from small- and medium-sized firms in three manu-
facturing industries in Norway shows that strategies searching for suitable suppliers can be
divided into different categories, including one in which choice of service providers reflects a
policy commitment to buy locally. A second type of strategy is when the choice of subcontractor
is a result of a wide professional search process across regions in order to find the best
alternative. A third is where service relations are co-ordinated by a parent company or entail
purchased goods. Finally, there is a group of firms that have left the matter of choice of service
suppliers to brokers. These results add new elements to the discussion about the competitive
role of industrial relations.
Key words: Manufacturing industry, SMEs, outsourcing, business services, Norway, proximity
INTRODUCTION
International competition in complex and
customised products is based on advanced
competence, for which firms seldom entirely
cover themselves. Several recent studies have
discussed business service purchasing, dis-
integration and performance (O'Farrell et al.
1993; Illeris 1996; MacPherson 1997; Bennett
& Robson 1999; Wernerheim & Sharpe 1999).
However, Bryson (1997) and Bryson and
Daniels (1998) are among the few that at firm
level have empirically analysed the relation-
ship between sourcing strategies and geography.
Bryson and Daniels (1998) found that greater
effort in searching mainly concerns larger
firms with the necessary internal capacity
and competence to give such tasks priority,
whereas small- to medium-sized enterprises
(SMEs) carry out a far more limited search
before a final decision is made.
This study has been motivated by two
concerns. First, to show empirically how
different industrial activities rely on each
other. Second, to examine SMEs' choice of
business service partners, focusing on the
interplay between internal and external re-
sources, strategies and location.
The chief focus is a discussion on differ-
ences in use of external service links. For
instance, do SMEs residing in rural areas with
less favourable service conditions have other
supply solutions than those located in urban
areas with more service suppliers to choose
from? A discussion on outsourcing strategies
also reflects differences between firms ap-
preciating geographical nearness and firms
searching widely for service suppliers.
The paper begins with a brief overview of
the literature and a conceptual discussion
focusing on outsourcing. The empirical evi-
dence is based on three different sources.
Tijdschrift voor Economische en Sociale Geografie ± 2000, Vol. 91, No. 2, pp. 122±134
# 2000 by the Royal Dutch Geographical Society KNAG
Published by Blackwell Publishers, 108 Cowley Road, Oxford OX4 1JF, UK and 350 Main Street, Malden MA 02148, USA
2. A census of business services of 1994, broken
down by industrial subclass and type of
location measured by centrality, portrays some
details of population and geographical dis-
tribution of business services. Firms engaged
in activities belonging to different groups are
classified by largest activity by total value
added.
The outsourcing issue is among others
empirically approached by using data from a
telephone interview survey which took place
in autumn 1996, and includes 416 manufac-
turing firms across the country. A stratified
random sample in three chosen sectors is
based on Dun & Bradstreets' register. This
statistical analysis first investigates the share of
firms buying different business services, show-
ing internal characteristics giving respectively
lowest and highest purchasing probability.
A following analysis includes location and
distance measurements between buying firms
and service suppliers. Finally, the kinds of
business services based exclusively on external
supplies and internal service resources are
investigated. The third set of empirical data
explains some of the reasons why sourcing
strategies differ. It is based on a case study
including another 32 firms (from in-depth
interviews with senior staff).
The case study shows in detail why some
firms favour a business service partner geo-
graphically near, while others are more
flexible to location of potential suppliers.
The paper closes with some concluding re-
marks.
THEORETICAL AND CONCEPTUAL
FRAMEWORK
The outsourcing concept, including synony-
mous terms such as `externalisation', `con-
tracting out', sometimes neglects firms'
different sourcing histories. In some cases
firms have obviously changed activities from
internal to external during a specific time
period. Firms may also use external sources on
a more permanent basis. Finally, some pre-
vious indoor activities have changed status to
independent profit units. Several authors, in
discussing outsourcing, do not specify cases
where individual firms have themselves ex-
perienced these shifts (Baro & Soy 1993;
MacPherson 1997). Van Geenhuizen and
Van der Knaap (1997, p. 315), avoid this
definition problem altogether by using the
term `bought-in'.
Finally, the conceptual discussion on out-
sourcing should consider the regulation of
the relationship between the parties. Marshall
(1994, p. 41), uses the term `contracting out',
indicating a formal agreement. Applying the
same term on SMEs may be misleading. In
fact, empirical evidence from this and other
studies has shown that local relations espe-
cially can be a result of informal agreements
where long-term relationships, trust and
shared values count (Bryson 1997, pp. 4±5,
Rusten 1997a, p. 182).
Changes in the way individual firms arrange
service supply needs should also be related to
the period taken into account. Shifts from
internal to external sources during a four-year
period (up to 1996) for the firms included in
this study did reveal high degree of stability.
Logically, the outsourcing term is used here
in a broad sense, covering all registered sup-
plies external to the firm. Discussing sourcing
strategies implies awareness of certain struc-
tural characteristics. This paper has mostly
been concentrated on the situation of SMEs.
Circumstances surrounding the outsourcing
of business services in larger companies seem
different, as larger companies often comprise
an altogether different base of internal re-
sources and are thereby more capable of
finding good sourcing solutions. Size, usually
in combination with more advanced organisa-
tional, technological or marketing settings,
makes larger companies the most interesting
customers. Consequently, these companies
will usually receive more attention from the
service sector than SMEs. O'Farrell et al.
(1993) and Bennett and Robson (1999) found
a greater ability of larger firms to use business
services. Our empirical results also show that
size (measured by employment) counts.
The term `producer service' is widely used
to denote the type of service firms that
primarily sell to commercial firms and public
institutions rather than private consumers.
The definition is, however, not consistent in
the literature (Wernerheim & Sharpe 1999).
Business services, in addition to insurance,
finance and real estate, are usually still
GEOGRAPHY OF OUTSOURCING 123
# 2000 by the Royal Dutch Geographical Society KNAG
3. included. The study focus on the business
service industry, which is a much narrower
class, comprises professional, information
and intellectual services (Illeris 1996, p. 59).
Table 1 specifies the business service sub-
classes included in this survey.
What is gained by choosing external sup-
pliers will partly be dependent on the nature
of the firm. Slimming internal operations to
improve performance as emphasised by Mar-
shall (1994, pp. 42±47), is no doubt a common
strategy among large companies. However,
SMEs with an already lean administration
usually have fewer possibilities of reducing
staff or work-task arrangements.
Another and more relevant outsourcing
motive for SMEs is access to specialised
knowledge in order to rapidly adapt to chang-
ing economic and technological conditions.
Service support is often needed to gain ben-
efits from the latest technologies without the
expense and risks of acquiring new systems
and staff. Internal diseconomies of scope,
scale or infrequent use are additional expla-
nations. Involving a `neutral' third party to
solve internal organisational problems that
may lead to solutions unpopular with the staff
is another outsourcing motive.
What are the alternatives for remotely
located firms in cases where local service
supplies are missing? Several studies have shown
that business partners prefer face-to-face
communication (Illeris 1996, pp. 111±115).
Recent studies like Bryson (1997) and Rusten
(1997a) stress the point of geographical and
cultural proximity between buyers and sellers.
Personal contact, including confidentiality,
trust, frequent and informal communication,
seems to be highly appreciated. Some firms
even have a local trade commitment, when-
ever possible, to help keep local business alive.
Word-of-mouth recommendations, the ability
to repeat own or others' previously successful
assignments, reduces the risk of making an
unsatisfactory decision. The importance of
these more or less informal elements limits
the motivations searching for long-distance
alternatives. This observed `narrowness' in
choice of business partners suggests that the
competitive role of agglomerations can some-
times be overplayed. Many local links are
simply formed by convenience.
METHODOLOGY
The findings in this paper are based on two
linked research methodologies. A telephone
interview survey from autumn 1996 includes
416 firms across Norway. The sample frame
size compared with the number of firms
included gives a rate of coverage of nearly
45% of the total population, according to
official statistics of registered businesses in the
sectors and size range that was chosen. Names
of firms, addresses and telephone numbers
were from Dun & Bradstreets' register, based
on information collected from the Brùnnùy-
sund Registration Centre (the Norwegian firm
and tax registration authority).
The sampled firms were selected from three
manufacturing sectors representing rather dif-
ferent types of production in relation to material
input and work-force competence structure.
The three sectors chosen (EU-standard NACE
rev. 1) were: 15±16, Food manufacturing; 29,
Manufacture of machinery and equipment;
30±33, Electronic and optical equipment
manufacturing.
A logistic regression model was used to test
which characteristics were of most importance
in describing the surveyed firms' purchasing
behaviour. The independent variables were
respectively three values of each of the vari-
ables: industry, firm size and location. The
coefficients were transformed into percent-
ages and reported by showing combinations
for respectively the lowest and highest pur-
chasing probability.
Another 32 firms were part of a supplemen-
tary case study based on personal interviews
with senior staff. Both samples were stratified
to be broadly representative according to the
target population, seeking a balance between
the type of industry and location.
The selected firms in both samples had
20±250 employees. Seventy per cent had 20±50
employees, 18% 51±100, and 11% 101±250.
(Employment information was missing for five
firms). Fifty-one per cent were independent
firms, and the rest were subsidiaries of large
companies.
According to status in 1995 only 8% of the
firms had foreign ownership (majority of
shares), and 48% reported export activity.
Thirty-seven per cent of the food manufac-
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4. turing firms were located in large urban areas,
whereas 54% of the machinery manufacturing
industry and as much as 62% of the electronic
manufacturing firms had this location. An
important observation is that the latter in-
dustry had only one rural firm, and therefore
in general was located in more favourable
service surroundings than the two other
industries.
Note that each firm has only been asked
about the most important trade partner for
each category. Consequently, the data does
not show how much each type of service is
used, nor how many different suppliers are
actually involved, nor the exact trade off
between external and internal resources.
THE GEOGRAPHY OF BUSINESS
SERVICES
Current data collection methods complicate
the estimation of business service employ-
ment. Official statistics in Norway classify firms
by their most important activity. Conse-
quently, service employment within manufac-
turing firms is classified as manufacturing
employment. Service activities are in reality
performed in all kinds of industries. The
service industry comprises firms where service
is the final product, while service `workers'
produce independently of whatever the final
product of the particular workplace is. Aggre-
gate statistics thus underestimate business
services employment and the overall role of
the economy. By collecting firm information
from primary sources concerning service
provision, valuable insight about manufac-
turing and services dependencies is gained.
(A more comprehensive presentation of the
taxonomy of services is found in Dahlstro
Èm
(1991, pp. 7±28), Illeris (1996, pp. 11±30) and
Wernerheim and Sharpe (1999).)
Official Statistics in Norway, based on 1995
figures, showed that the public and private
service sector employed 950,000 people. This
makes a share of 46% of total employment
when including all sectors, while about 91,000
of this employment comprises business service
firms (Official Statistics of Norway 1997a).
Skilled labour demand and the need to be
geographically close to customers are elements
that explain why business service firms are
mainly concentrated in large urban areas. Im-
portant customer groups are larger companies
head offices and the service factor itself.
Trade relations will often take advantage of
proximity, as many situations require intel-
lectually intensive and frequent face-to-face
interaction between clients and providers
(Mackun & MacPherson 1997, p. 660). Ways
of communication for long-distance cus-
tomers are personal meetings combined with
contact via post, telephone and information
and communication systems. Business services
found in small urban areas or rural districts
are usually more standardised and mainly
serve the local market.
Table 1 includes data showing location of
business service firms by status in 1994, broken
down by industrial subclasses and type of
municipality measured by centrality (unpub-
lished data from Statistics Norway 1997). The
general pattern is that there are only minor
differences between supply in large urban
areas, comprising Norway's six largest towns
including surrounding suburbs with the ag-
gregated group containing all other urban
areas. The level of local presence is consider-
ably lower in municipalities in rural districts. A
closer examination of the different service
types shows that only three groups have a
national coverage of more than 50% of all
municipalities, with accounting, book-keeping
services and auditing topping the list.
Employment agency services, located in
10% of all municipalities, have the poorest
coverage of all and are hardly present outside
urban areas. These services apply mainly to
the office sector, which explains why low
demand and occurrence is small outside large
urban areas. In addition, the employment
base in rural districts is usually not large
enough to comprise necessary skills to estab-
lish this type of business. The fact that muni-
cipalities officially classified as `rural' (for
more details see Official Statistics of Norway
1994) are located more than 45 minutes
travelling time from the nearest urban area,
is another explanation of why few firms have
the possibility of using this type of temporary
workforce. Other types of business services
showing relatively low distribution figures are
hardware-related computer services and mar-
keting services.
GEOGRAPHY OF OUTSOURCING 125
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5. THE GEOGRAPHY OF OUTSOURCING
O'Farrell et al. (1993) showed that business
size and exporting activity are important
explanatory variables of which firms externa-
lise business services. An investigation of the
relationship between firm characteristics and
purchasing behaviour has also been a topic in
this study.
Tables 2±4 and Figure 1 are all based on
the results from the telephone survey. The
empirical analysis first shows characteristics of
most importance, describing firms' purchas-
ing activity. Combinations showing lowest and
highest purchasing probability for each service
category are reported. The analysis goes on to
present figures ranking purchasing frequency
and indicating the distance between trade
partners. The data finally shows how com-
position of indoor and outdoor sourcing
strategies varies with type of location.
The results of the logistic regression model
in Table 2, where the range between the
minimum and maximum values, in combi-
nation with a level of significance is well within
0.05, indicate a statistically strong level of
explanation for the characteristics related to
employment agency services and infrastruc-
ture related technical service. A medium level
of explanation was found for all other business
service categories except for process-/product-
related technical services, together with busi-
Table 1. Business services in Norway, status 1994, measured by the number of firms specified by the industrial subclass
and location measured by coverage rate of municipalities for national total and divided into centrality groups. (Statistics
for Norway 1996 ± not previously published).
Industrial subclass (NACE)
Firms
All
municipalities
(N=435)
Large
urban areas
(N=104)
Other
urban areas
(N=128)
Rural
districts
(N=203)
Business, management and tax
consulting services
764 30 46 43 14
Marketing services 166 15 23 23 5
Legal services 661 26 40 39 11
Accounting, book-keeping
and auditing services
2,373 88 91 91 84
Advertising, secretarial-translation
and office related support systems
2,372 51 68 62 36
Computer services (software
related)
891 34 58 41 14
Computer services (hardware
related)
267 15 30 27 9
Technical services (infrastructure
related)
1,809 47 61 59 33
Technical services (process-/
product-related)
1,887 52 74 63 34
Employment agency services 125 10 17 (18) 20 1
Total 11,315 ± ± ± ±
Note: The figures include NACE classes 71.33, +72 through 74.15 (not including 74.15). Municipalities in
large urban areas which are Oslo, Kristiansand, Stavanger, Bergen, Trondheim and Tromsù with suburbs.
Norway has 435 municipalities, in which 104 are classified as belonging to large urban areas, including
Oslo, Kristiansand, Stavanger, Bergen, Trondheim and Tromsù with suburbs, 128 were part of what is
defined as other urban areas, and 203 constituted municipalities in rural districts. More details on the
above centrality classes found in this table and location maps, are documented in Rusten (1997b).
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6. Table 2. Firm characteristics giving respectively the lowest and highest purchasing probability reported in percentage for each service category.
Combinations of variables with lowest
purchasing probability
Combinations of variables with highest
purchasing probability
Service category
Variable
combinations
Percentage
probability
Number of
observations
Variable
combinations
Percentage
probability
Number of
observations
Business, management and tax consulting services S-U-M 49.8 28 L-L-E 30.7 7
Marketing services S-U-M 59.3 28 L-L-F 11.3 12
Legal services S-U-M 84.8 28 M-L-M 47.2 17
Advertising, secretarial, translation and office related
support services
S-R-E 80.9 1 L-U-M 32.9 10
Computer services (hardware related) S-U-E 88.6 23 L-L-F 52.9 12
Computer services (software related) S-R-M 86.9 18 L-U-F 61.6 6
Technical services (infrastructure related) S-L-E 78.6 39 L-R-F 16.0 3
Technical services (process/product related) S-L-M 59.6 62 L-R-E 34.2 0
Employment agency services S-R-M 86.3 18 L-L-E 2.3 7
Note: Column for variable combinations, in which first character indicates firm size: S = small; M = medium sized; L = large. Second character indicates
centrality: L = large urban; U = other urban; R = rural. Third character indicates type of industry: F = food manufacturing; M = machinery manufacturing;
E = electronic manufacturing.
7. ness, management and tax consulting services,
for which the model has a low explanatory
capability. These figures clearly show a positive
relationship between purchasing and firm size
for a majority of the services included (i.e.
larger firms are more likely to purchase than
smaller firms). Furthermore the data shows
that for small firms an urban location usually
maximises the probability for purchasing.
Exceptions are the two kinds of technical
services for which a rural location gives the
highest score. For all but two service categories,
firms belonging to the food manufacturing or
electronic industry sector are the most active.
Small firms comprise those with lowest purchas-
ing probability. Further, this low-purchasing
category includes rural or urban locations
from all industries but the food manufactur-
ing sector.
An interesting point to note is that an
analysis comparing purchasing behaviour be-
tween firms engaged in exports with those
based in a home-market did not reveal signifi-
cant differences between the two groups. This
result differs from O'Farrell et al. (1993), which
found exporters purchasing more services
than others. Neither did considerable differ-
ences occur when measuring how many dif-
ferent services an average firm buys (four in
both groups), or measuring the number of
purchasers for each service category.
The analysis has so far shed light on how
internal characteristics and location may
influence outsourcing. Table 3 indicates dif-
ferences between the type of business service
in sensitiveness to distance. The local trade
category contains those cases where business
relations are between any two local partners.
Regional trade comprises cases where the
partners are located in different municipali-
ties in the same region. Provisions based on
supplies from other parts of Norway or abroad
are covered by the label national/inter-
national trade. (Only 20 firms were registered
as having any business service trade abroad.)
Another column shows the number of cases
where trade is registered without information
about the address. A further column shows the
number of firms reported trading for each
business service category.
Table 3. A measure of distance by percentage based on a comparison of location of 416 small- and medium-sized
manufacturing firms and their main suppliers specified by service category.
Industrial subclass (NACE)
Local
trade
Regional
trade
National/
international
trade
No
information
about trade
partner's
address No.
Computer services (software related) 45 (133) 42 (122) 4 (11) 9 (27) 293
Computer services (hardware related) 45 (126) 42 (116) 8 (23) 5 (13) 278
Legal services 41 (105) 47 (119) 8 (21) 4 (10) 255
Advertising, secretarial, translation and
office related support services
49 (113) 28 (63) 10 (23) 13 (30) 229
Technical services (process/product
related)
37 (64) 30 (53) 17 (30) 16 (27) 174
Technical services (infrastructure related) 47 (72) 38 (58) 8 (12) 8 (12) 154
Business, management and tax consulting
services
40 (59) 48 (72) 6 (9) 6 (9) 149
Employment agency services 63 (71) 21 (23) 6 (7)* 10 (11) 112
Marketing services 36 (38) 32 (34) 15 (16) 17 (18) 106
All business services 45 (781) 38 (660) 9 (152) 9 (157) 1750
Note: * are supplying firms that have addresses near a `border' between two regions.
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8. Most business services purchased were
located in the same municipality as the buying
firm (Table 3). The only two exceptions were
legal services and the joint category including
business management and tax consulting
services, for which regional rather than local
trade was more common. An analysis of where
firms choosing not to use the local lawyer
revealed that as much as 63% (of 73 firms) did
business with Oslo solicitors.
Technical services (process-/product-related),
together with marketing services, had the
highest volume of trade between different
parts of the country or abroad. Relatively
speaking, employment agency services, to-
gether with business management and tax
consulting services, in addition to software
related computer services, had the lowest
number of cases of trade involving a supplier
outside the purchaser's own region. For the
first two mentioned categories, sensitiveness
to distance is probably an important expla-
nation for why so few cases of long-distance
trade occur. For software-related computer
services, local or at least regional alternatives
often stem longer-distance trade (Table 1).
Most service trade taking place between
local parties implies that they often already
know each other. This is probably also why
many arrangements can be based on in-
formal agreements rather than being regu-
lated by detailed contracts. The two types of
computer industries received the highest
rank. According to Illeris (1996, p. 201) these
service categories are often co-produced
internally and externally. External computer
support is needed to keep track with con-
stantly new developments in this field. Few of
the firms are of a size that justifies an entirely
internal ICT resource base. Nor is it usually
possible to recruit expertise outside large
urban areas. Details from the case studies
have, however, shown some examples of these
types of services traded on a long-distance
basis.
Another type of business service with a rela-
tively high number of buyers is legal services.
Firms not reporting legal service trade were
often among the larger, and sometimes part
of an, enterprise headquartered elsewhere.
Instead such services were usually based on
external sources. The type of business service
that, according to the empirical evidence,
had fewest purchasers was marketing services.
Earlier distribution figures (Table 1) revealed
that marketing services show a rather poor
geographical coverage. A rather poor supply
situation, lack of tradition using this type of
service, or reliance on internal resources,
explains the low demand.
The survey had, in all, very few firms that
have externalised services previously carried
out in-house. When asked whether the present
outsourced services (status for 1996) were part
of firms' internal arrangement 3±4 years ago,
in fact only 11% answered that such changes
had taken place. The types of business services
with the highest number of such changes were
computer services (software) with 13 cases,
and business and management consulting
services with 12. All other service categories
had six or less each. The number of changes
included too few cases to uncover any possible
variation between industries or type of loca-
tion. Finally, seven firms had changed one or
two previous internal activities into indepen-
dent profit centres.
Table 4, including data that aims to show
whether the type of sourcing strategy (i.e.
internal/external) varied by location, con-
firms that many firms base marketing on
internal resources. It should be mentioned
that a small majority of firms in rural locations
chose internal instead of external supplies as a
source for advertising, secretarial, translation
and office-related support services. However, a
small number cannot exclude the fact that this
is caused by statistical coincidence. Finally, a
comparison of the internalisation values for
the two groups of firms in the same table only
shows significant differences when comparing
the two categories for advertising, secretarial,
translation and office-related support services,
as well as marketing services. For marketing
services, the internalisation rate is higher for
rural firms, which in most cases is probably a
compensation for not having favourable local
access.
For all other types of services the variations
in internalisation values were quite marginal.
The two columns including firms without
registrations do not confirm that rural firms
use any less business services than those
located in large urban areas.
GEOGRAPHY OF OUTSOURCING 129
# 2000 by the Royal Dutch Geographical Society KNAG
9. Table 4. Small- and medium-sized firms located in municipalities of large urban areas and rural districts, showing registered strategies for the use of business services,
percentage shares. Real numbers are shown in parentheses.
Firms in large urban areas (N=203) Firms in rural districts (N=62)
Industry Externalised Internalised No
registration
Externalised Internalised No
registration
Business management and tax consulting services 34 (69) 27 (55) 39 (79) 32 (20) 32 (20) 35 (22)
Marketing services 24 (49) 45 (92) 31 (62) 23 (14) 55 (34) 23 (14)
Legal services 60 (122) 12 (25) 28 (56) 68 (42) 15 (9) 18 (11)
Advertising, secretarial, translation and office
related support services
49 (99) 24 (49) 27 (55) 31 (19) 35 (22) 34 (21)
Computer services (hardware related) 66 (133) 20 (40) 15 (30) 65 (40) 19 (12) 16 (10)
Computer services (software related) 63 (127) 16 (32) 22 (44) 61 (38) 15 (9) 24 (15)
Technical services (infrastructure related) 29 (59) 12 (24) 59 (120) 44 (27) 11 (7) 45 (28)
Technical services (process/product related) 32 (64) 22 (45) 46 (94) 44 (27) 21 (13) 35 (22)
Employment agency services 39 (79) 0 61 (124) 5 (3) 0 95 (5)
All business services 44 (801) 20 (362) 36 (664) 41 (230) 23 (126) 36 (201)
10. SEARCH STRATEGIES AND TRADE
RELATIONS ± A CASE STUDY APPROACH
Outsourcing for business services may enable
the firm to increase flexibility, gain expertise
and reduce expenses (Marshall 1994, pp. 41±42).
Outsourcing can also be used as a method to
become aware of real costs. Some firms evalu-
ate internal service costs by alternatives bought
on the market. Case study evidence revealed
how these projects are sometimes organised by
asking for internal bids against external
vendors, before searching for alternatives.
The different search strategy categories are
shown in Figure 1 and discussed below. No
significant urban rural contrast concerning
strategies has been observed among firms
included in the case study.
The empirical results based on the tele-
phone survey have already shown that business
service trade often engages firms located in
the same or neighbouring municipality. Rel-
evant factors for making such a choice men-
tioned by the case study firms were:
. A simplified searching process.
. Use of local alternatives gives an advan-
tageous access, which minimises trans-
action costs.
. The parties can easily communicate with
each other, as they are part of a common
local culture.
. The choice of suppliers is based on
acquaintances and informal agreements.
. Basing the choice on the firms' own or
others' previous experience is a away of
avoiding too much going wrong.
. A local commitment to keep local busi-
nesses alive.
Few firms seem to have adopted the same
strategy when choosing between service sup-
pliers, as when searching for suitable suppliers
of goods. Managers explained that service
trade strategies were given lower priority. This
explains the occurrence of rather few cases of
`advanced searchers' among our cases.
A few firms get service supplies outside their
own region because this is co-ordinated by a
parent company located elsewhere. Common
service categories provided in this way are legal
services, accounting and auditing, marketing
and computer services. Those who trade with
profit units either within their own organis-
ation or with freelancers that used to be a part
of the firms' own staff can also be classified in
the same category and defined as `defensive'
searchers. Some of the case firms were rather
Figure 1. A diagram based on the case studies, showing the firms' dominating search strategies preceding their out-
sourced service agreements. A line crossing columns indicates strategy combinations.
Local patriotism Wide search Defensive search Third-party search
via
parent company
Entailed
goods Broker
Trade
organisation
12
1 ÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐ 1
2 ÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐ 2
1 ÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐ 1
1 ÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐÐ 1
7
1 ÐÐÐÐÐÐÐ 1
1 ÐÐÐÐÐÐÐÐÐÐÐÐÐ 1
2 1
2
17 8 5 2 4 2
GEOGRAPHY OF OUTSOURCING 131
# 2000 by the Royal Dutch Geographical Society KNAG
11. defensive in the process of choosing service
sources, as services was offered along with
purchased goods. Examples are test labs for
food, or expertise in finding individual tools
or machinery adjustments. In some cases these
agreements functioned quite well. However,
there were still concerns about the real costs,
as the price of the services was not specified.
The services were, in fact, paid for in cases
were they had not been used. In addition
some firms found it difficult to terminate
these type of contracts as so many elements
were involved.
Small- and medium-sized firms as indi-
viduals have obviously limited market power.
Some food manufacturing firms admitted this
weakness by leaving the choice of service
supplies to a third party, i.e. a broker. A broker
is a type of business management adviser,
dealing with suppliers on behalf of several
paid-membership firms. Delegating such deci-
sions to brokers with nation-wide coverage will
logically loosen up local suppliers. However,
these contracts have often concerned more
standardised forms of services than what is
usually known as business services. Insurance
and travel agency services are two examples.
Still another variant of letting a third party
take the responsibility of finding the best
offers is making use of trade organisation
arrangements. Agreements dealing with com-
puter service supplies were found among the
cases. The case study also showed examples of
trade organisations offering legal advice and
expertise on marketing surveys.
Stability of contracts varies considerably by
type of service. Apparently, complex services
with substantial switching costs will probably
result in a higher degree of long-lasting
contracts than more standardised services,
which can more easily be evaluated through
tender procedures.
The occurrence of geographical nearness
between the observed trading parties has
already been explained. There are, however,
examples where firms prefer geographical
distance. The case study revealed that some
firms avoided the nearest legal advice because
local solicitors were not considered indepen-
dent enough from local community events.
Wrong field of competence, was a further
explanation. Several managers also share the
impression that law firms in the capital in
general are of a better standing than else-
where. Hermelin's (1997, p. 155) business
service study from Sweden suggests that a
prestigious down-town address in the capital
signals a legal firms' authority and success.
The overall impression from the case
studies, especially for computer services, was
that the firms had usually used relatively few
resources on searching for and evaluating
different alternatives. Nor did many have
analysis that included price comparisons.
Complaints followed by changes of partners
seem more common for computer services
than for other service categories. Still, switch-
ing computer service sources can sometimes
be considered risky economically and techno-
logically. Some customers are in reality trapped
by already invested technology. A further chal-
lenge has to do with lack of competence in
judging whether a change of supplier will
represent an improvement before it actually
has been tried out.
CONCLUSION
The data first of all suggests a positive re-
lationship between outsourcing activity and
firm size. These provisions will probably rein-
force larger companies' competitive position,
whereas smaller firms, especially those in rural
areas, will often have difficulties or may not
even be aware that they are not updated, are
paying too much or receive services of lower
quality standards.
Empirically, this study has included three
manufacturing sectors, and shown some varia-
tions in purchasing probability. It seems
relevant, however, to ask how an outsourcing
study based on other industries, such as the
service industry sector itself, would influence
the results concerning geographical distance
between the involved parties.
A consequence of a `narrow search' process
is that small- and medium-sized firms easily
turn to local service suppliers. This common
strategy gives a somewhat revised impression
about the motivating force and quality of agglom-
erations or geographically concentrated clusters.
Ways of choosing partners also question the
assumption that repeating business signals
quality. Due to priorities ± limited internal
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12. resources ± the case studies have instead re-
vealed that rather few SMEs thoroughly evalu-
ate service suppliers. Managers being resistant
to change can be a further explanation of why
many stick to existing agreements.
What are the business and regional impli-
cations of these results? Insufficient quality
or expensive nearby service alternatives can
obviously weaken firms' competitive positions.
Firms in rural areas especially, with a general
poorer service infrastructure compared to the
situation in larger cities at least, risk involving
service suppliers that certainly are not among
the `best'. The present tight labour market
situation in Norway also indicates that rural
firms will have difficulties strengthening an
internal resource base. Nor is influx of tem-
porary labour usually an alternative resource
base for firms in rural areas, simply because
this service category hardly exists outside
larger urban areas. A general service demand
increase, due to a more fierce and compli-
cated competitive situation, can therefore
further increase the rural/urban economic
contrasts.
Even if geographical proximity is still often
appreciated from a communicative point of
view, the data has shown that it is possible to
use distant service suppliers. The few observed
cases where the whole issue about geographical
distance between the involved party is more
open are usually firms that either have the
necessary internal resources to search geo-
graphically more widely than their own com-
munity, or those that have left the whole
matter of searching to others. A more sophis-
ticated use of ICT-systems might be an import-
ant tool to those firms that do not necessarily
want to use local suppliers. The alternative of
using service brokers and other third party
sourcing arrangements can be a way out for
firms with internal limited resources. This also
signals demand for further empirical evidence
on service broker activity and regional effects.
Acknowledgements
Thanks are due to Odd Sta
Êle Dalslaaen for assisting
in the project. Also thanks to Arild Aakvik for giving
statistical advice and Torstein Nesheim for academic
comments. This study is financially supported by the
Research Council of Norway (TYIN-Programme).
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