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Global Co-Evolution of Firm Boundaries: Process Commoditization, Capabilities Development, and Path Dependencies

  • Stephan Manning
  • Silvia Massini
  • Carine Peeters
  • Arie Lewin

This paper studies the co-evolution of firm boundaries and capabilities by examining the influence and interplay of process commoditization, changing external availability of capabilities and firm specific paths of governance decisions, along with strategic drivers guiding these decisions. We test hypotheses on a unique and comprehensive panel of global services sourcing projects from early experiments in 1980s through 2011. Our findings suggest that initial firm governance decisions are strongly influenced by process commoditization, external availability of services, and firm strategic objectives. With experience, governance decisions are primarily affected by past decisions and emerging – internal and/or external – sourcing capabilities. The results indicate persistent heterogeneity of boundary configurations as firm and supplier capabilities develop and differentiate over time.

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Paper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers CEB with number 12-009.

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Length: 42 p.
Date of creation: Mar 2012
Date of revision:
Publication status: Published by:
Handle: RePEc:sol:wpaper:2013/113020
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  1. Grossman, Gene & Helpman, Elhanan, 2002. "Outsourcing in a Global Economy," CEPR Discussion Papers 3165, C.E.P.R. Discussion Papers.
  2. Sako, Mari, 1996. "Suppliers' Associations in the Japanese Automobile Industry: Collective Action for Technology Diffusion," Cambridge Journal of Economics, Oxford University Press, vol. 20(6), pages 651-71, November.
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  9. Arie Lewin & Carine Peeters, 2006. "Offshoring administrative and technical work: business hype or the onset of fundamental strategic and organizational transformation ?," ULB Institutional Repository 2013/9039, ULB -- Universite Libre de Bruxelles.
  10. Tommaso Ciarli & Riccardo Leoncini & Sandro Montresor & Marco Valente, 2008. "Technological change and the vertical organization of industries," Journal of Evolutionary Economics, Springer, vol. 18(3), pages 367-387, August.
  11. Arie Lewin & Silvia Massini & Carine Peeters, 2008. "Why are companies offshoring innovation ?the emerging global race for talent," Working Papers CEB 08-009, ULB -- Universite Libre de Bruxelles.
  12. Richardson, G B, 1972. "The Organisation of Industry," Economic Journal, Royal Economic Society, vol. 82(327), pages 883-96, September.
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  14. Jorge Niosi & F. Ted Tschang, 2009. "The strategies of Chinese and Indian software multinationals: implications for internationalization theory," Industrial and Corporate Change, Oxford University Press, vol. 18(2), pages 269-294, April.
  15. Michael C. Jensen & William H. Heckling, 1995. "Specific And General Knowledge, And Organizational Structure," Journal of Applied Corporate Finance, Morgan Stanley, vol. 8(2), pages 4-18.
  16. Howard Gospel & Mari Sako, 2010. "The unbundling of corporate functions: the evolution of shared services and outsourcing in human resource management," Industrial and Corporate Change, Oxford University Press, vol. 19(5), pages 1367-1396, October.
  17. Isabel Díez-Vial, 2007. "Explaining Vertical Integration Strategies: Market Power, Transactional Attributes and Capabilities," Journal of Management Studies, Wiley Blackwell, vol. 44(6), pages 1017-1040, 09.
  18. Mari Sako, 2006. "Outsourcing and Offshoring: Implications for Productivity of Business Services," Oxford Review of Economic Policy, Oxford University Press, vol. 22(4), pages 499-512, Winter.
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