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"Supply Portfolio Concentration in Outsourced Knowledge-Based Services"

Mahka Moeen, Deepak Somaya, and Joseph T. Mahoney


First Author :

Mahka Moeen
Robert H. Smith School of Business
University of Maryland
3330 Van Munching Hall
College Park, MD 20742

Second Author :

Deepak Somaya
Business Administration
University of Illinois at Urbana-Champaign, College of Business
1206 S. Sixth Street
185 Wohlers Hall, MC 706
Champaign, IL 61820

Third Author :

Joseph T. Mahoney
Business Administration
University of Illinois at Urbana-Champaign, College of Business
1206 S. Sixth Street
140C Wohlers Hall, MC 706
Champaign, IL 61820

Abstract :
In 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.
Keywords :
governance inseparability, knowledge-based services, outsourcing
Footnotes & Acknowledgements :
We gratefully acknowledge comments from Anne Parmigiani. We also received valuable feedback from presentations at the Atlanta Competitive Advantage Conference (Georgia State University, 2010), Midwest Strategy Meetings (Kellogg School of Management, 2010), University of Illinois (2010), Mid-Atlantic Strategy Colloquium (University of Maryland, 2010), and ASQ-HEC-OMT Conference on “Coordination within and among organizations” (HEC Paris, 2011).
Manuscript Received : 2011
Manuscript Published : 2011
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