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Supply Portfolio Concentration in Outsourced Knowledge-Based Services

Author

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  • Mahka Moeen

    (Robert H. Smith School of Business, University of Maryland, College Park, Maryland 20742)

  • Deepak Somaya

    (College of Business, University of Illinois Urbana–Champaign, Champaign, Illinois 61820)

  • Joseph T. Mahoney

    (College of Business, University of Illinois Urbana–Champaign, Champaign, Illinois 61820)

Abstract

In the extant vertical integration literature, the question of how a 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 trade-offs across their entire set of outsourced projects.

Suggested Citation

  • Mahka Moeen & Deepak Somaya & Joseph T. Mahoney, 2013. "Supply Portfolio Concentration in Outsourced Knowledge-Based Services," Organization Science, INFORMS, vol. 24(1), pages 262-279, February.
    • Handle: RePEc:inm:ororsc:v:24:y:2013:i:1:p:262-279
    DOI: 10.1287/orsc.1110.0725
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