Supply Portfolio Concentration in Outsourced Knowledge-Based Services
AbstractIn the extant vertical integration literature, the question of how the firm's portfolio of outsourced work is managed across suppliers has been relatively understudied. We seek to advance this area of research by examining factors that influence how concentrated the firm's outsourcing is among its set of suppliers. Using data on the outsourcing of patent legal services, we find empirical evidence that outsourced knowledge-based service work is concentrated in the hands of fewer suppliers when: (1) it requires greater firm-specific knowledge; (2) there is a higher level of interrelatedness across outsourced projects; (3) the firm's reliance on outsourcing is high; (4) its outsourced projects are focused on a narrower (capability) domain; and (5) the technological dynamism of this domain is low. Our study suggests that examining portfolio-level phenomena in outsourcing is a useful complement to the predominant focus on transaction-level outcomes in prior research because it provides insights into how firms manage tradeoffs across their entire set of outsourced projects.
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Bibliographic InfoPaper provided by University of Illinois at Urbana-Champaign, College of Business in its series Working Papers with number 11-0106.
Date of creation: 2011
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-11-21 (All new papers)
- NEP-CSE-2011-11-21 (Economics of Strategic Management)
- NEP-KNM-2011-11-21 (Knowledge Management & Knowledge Economy)
- NEP-LAB-2011-11-21 (Labour Economics)
- NEP-PPM-2011-11-21 (Project, Program & Portfolio Management)
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