Advertisement

Investigating the Relationship Between Outsourcing and Innovation

  • Benoit A. AubertEmail author
  • Akie Iriyama
  • Ondelansek Kay
  • Rajiv Kishore
Chapter
Part of the Progress in IS book series (PROIS)

Abstract

The linkages between outsourcing and innovation are complex. Some findings suggest that outsourcing is a way to generate increased levels of innovation. However, some recommendations extracted from the IT outsourcing literature do not seem to favor innovation through outsourcing arrangements. By understanding the different types of innovation and combining this knowledge with the IT outsourcing body of knowledge, it is possible to conjecture the potential effect of outsourcing on innovation in various circumstances.

Keywords

IT outsourcing Innovation 

References

  1. Amin, A., & Roberts, J. (2008). Community, economic creativity and organization. Oxford: Oxford University Press.CrossRefGoogle Scholar
  2. Anderson, C. (2009). Free: The future of a radical price. New York: Hyperion.Google Scholar
  3. Argyres, N., & Bigelow, L. (2010). Innovation, modularity, and vertical deintegration: Evidence from the early US auto industry. Organization Science, 21(4), 842–853.CrossRefGoogle Scholar
  4. Arrow, K. J. (1962). Economic welfare and the allocation of resources for creation. In The rate and direction of inventive activity: economic and social factors (pp. 609–625). Princeton University Press.Google Scholar
  5. Arthur, W. B. (2006). The structure of invention. Research Policy, 36(2), 274–287.CrossRefGoogle Scholar
  6. Aubert, B. A., Houde, J. F., Patry, M., & Rivard, S. (2012). A multi-level investigation of information technology outsourcing. The Journal of Strategic Information Systems, 21, 233–244.CrossRefGoogle Scholar
  7. Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120.CrossRefGoogle Scholar
  8. Barthélemy, J., & Quelin, B. V. (2006). Complexity of outsourcing contracts and ex post transaction costs: An empirical investigation. Journal of Management Studies, 43(8), 1775–1797.CrossRefGoogle Scholar
  9. Bjork, J., & Magnusson, M. (2009). Where do good innovation ideas come from? Exploring the influence of network connectivity on innovation idea quality. Journal of Production and Innovation Management, 26, 662–670.CrossRefGoogle Scholar
  10. Brusoni, S., Prencipe, A., & Pavitt, K. (2001). Knowledge specialization, organizational coupling, and the boundaries of the firm: Why do firms know more than they make? Administrative Science Quarterly, 46(4), 597–621.CrossRefGoogle Scholar
  11. Chen, Y., & Bharadwaj, A. (2009). An empirical analysis of contract structures in IT outsourcing. Information Systems Research, 20(4), 484–506.CrossRefGoogle Scholar
  12. Chesbrough, H. (2003). Open innovation: the new imperative for creating and profiting from technology. Boston: Harvard Business School Press.Google Scholar
  13. Chesbrough, H. (2006). Open business models: how to thrive in the new innovation landscape. Boston: Harvard Business School Press.Google Scholar
  14. Chesbrough, H., & Kardon Crowther, A. (2006). Beyond high tech: Early adopters of open innovation in other industries. R&D Management, 36(3), 229–236.CrossRefGoogle Scholar
  15. Christensen, J. F., Olesen, M. H., & Kjær, J. S. (2005). The industrial dynamics of open innovation: Evidence from the transformation of consumer electronics. Research Policy, 34(10), 1533–1549.CrossRefGoogle Scholar
  16. Delone, W. H., & McLean, E. (2003). The DeLone and McLean model of information systems success: A ten-year update. Journal of management information systems, 19(4), 9–30.Google Scholar
  17. Dibbern, J., Chin, W. W., & Heinzl, A. (2012). Systemic determinants of the information systems outsourcing decision: A comparative study of German and United States firms. Journal of the Association for Information Systems, 13(6), 466–497.Google Scholar
  18. Dibbern, J., Goles, T., Hirschheim, R., & Jayatilaka, B. (2004). Information systems outsourcing: A survey and analysis of the literature. ACM SIGMIS Database, 35(4), 6–102.CrossRefGoogle Scholar
  19. Drazin, R., Glynn, M. A., & Kazanjian, R. K. (1999). Multilevel theorizing about creativity in organizations: A sensemaking perspective. The Academy of Management Review, 24(2), 286–307.Google Scholar
  20. Espino-Rodríguez, T. F., & Padrón-Robaina, V. (2006). A review of outsourcing from the resource-based view of the firm. International Journal of Management Reviews, 8(1), 49–70.Google Scholar
  21. Gassmann, Oliver, Enkel, Ellen, & Chesbrough, Henry. (2010). The future of open innovation. R&D Management, 40(3), 213–221.CrossRefGoogle Scholar
  22. Gewald, H., & Dibbern, J. (2009). Risks and benefits of business process outsourcing: A study of transaction services in the German banking industry. Information and Management, 46(4), 249–257.CrossRefGoogle Scholar
  23. Ghemawat, P. (2007). Managing differences: The central challenge of global strategy. Harvard Business Review, 85, 58–68.Google Scholar
  24. Gilsing, V., & Nooteboom, B. (2005). Density and strength of ties in innovation networks: An analysis of multimedia and biotechnology. European Management Review, 3(2), 179–197.CrossRefGoogle Scholar
  25. Goo, J. (2010). Structure of service level agreements (SLA) In IT outsourcing: The construct and its measurement. Information Systems Frontiers, 12(2), 185–205.CrossRefGoogle Scholar
  26. Goo, J., Kishore, R., Rao, H. R., & Nam, K. (2009). The role of service level agreements in relational management of information technology outsourcing: An empirical study. MIS Quarterly, 33(1), 119.Google Scholar
  27. Granovetter, M. (1973). The strength of weak ties. American Journal of Sociology, 78(6), 1360–1380.CrossRefGoogle Scholar
  28. Himanen, P. (2001). The hacker ethic and the spirit of the information age. New York: Random House Inc.Google Scholar
  29. Hoecht, A., & Trott, P. (2006). Innovation risks of strategic outsourcing. Technovation, 26(5), 672-681.Google Scholar
  30. Karimi-Alaghehband, F., Rivard, S., Wu, S., & Goyette, S. (2011). An assessment of the use of transaction cost theory in information technology outsourcing. The Journal of Strategic Information Systems, 20(2), 125–138.CrossRefGoogle Scholar
  31. Kline, S., & Rosenberg, N. (1986). An overview of innovation. In Landau, R., & Rosenberg, N. (Eds.), The positive sum strategy (pp. 275–305). National Academy Press, Washington.Google Scholar
  32. Lacity, M. C., Khan, S., Yan, A., & Willcocks, L. P. (2010). A review of the IT outsourcing empirical literature and future research directions. Journal of Information Technology, 25(4), 395–433.CrossRefGoogle Scholar
  33. Lacity, M. C., Willcocks, L. P., & Khan, S. (2011). Beyond transaction cost economics: Towards an endogenous theory of information technology outsourcing. The Journal of Strategic Information Systems, 20(2), 139–157.CrossRefGoogle Scholar
  34. Langlois, R. N., & Robertson, P. L. (1992). Networks and innovation in a modular system: Lessons from the microcomputer and stereo component industries. Research Policy, 21(4), 297–313.CrossRefGoogle Scholar
  35. Lacity, M. C., Willcocks, L. P., & Rottman, J. W. (2008). Global outsourcing of back office services: Lessons, trends, and enduring challenges. Strategic Outsourcing: An International Journal, 1(1), 13–34.CrossRefGoogle Scholar
  36. Lessig, L. (2004). Free culture: the nature and future of creativity. New York: Penguin Press.Google Scholar
  37. Lessig, L. (2008). Remix: making art and commerce thrive in a hybrid economy. New York: Penguin Press.CrossRefGoogle Scholar
  38. Levina, N., & Vaast, E. (2008). Innovating or doing as told? Status differences and overlapping boundaries in offshore collaboration. MIS Quarterly, 32(2), 307–332.Google Scholar
  39. Malone, T. W. (2004). The future of work: How the new order of business will shape your organization, your management style, and your life. Harvard Business School Press. March, J. G. (1991). Exploration and exploitation in organizational learning. Organization Science, 2(1), 71–87.Google Scholar
  40. March, J. G. (1991). Exploration and exploitation in organizational learning. Organization Science, 2(1), 71–87.CrossRefGoogle Scholar
  41. Mason, M. (2008). The pirate’s dilemma. New York: Free Press.Google Scholar
  42. Murray, J. Y., Kotabe, M., & Wildt, A. R. (1995). Strategic and financial performance implications of global sourcing strategy: A contingency analysis. Journal of International Business Studies, 181-202.  Google Scholar
  43. Pittaway, L., Robertson, M., Munir, K., Denyer, D. A., & Neely, A. (2004). Networking and innovation: A systematic review of the evidence. International Journal of Management Reviews, 5/6(3/4), 137–168.Google Scholar
  44. Raymond, E. S. (1999). The cathedral and the bazaar—musings on linux and open source by an accidental revolutionary. Sebastopol: O’Reilly Media.Google Scholar
  45. Robertson, P. L., & Langlois, R. N. (1995). Innovation, networks, and vertical integration. Research Policy, 24(4), 543–562.CrossRefGoogle Scholar
  46. Rosenberg, N. (1982). Inside the black box: technology and economics. Cambridge: Cambridge University Press.Google Scholar
  47. Rottman, J. W. & Lacity, M. C., (2006). Proven practices for effectively offshoring IT work. MIT Sloan Management Review, 47(3), 56–63.Google Scholar
  48.  Schmookler, J. (1966). Invention and economic growth. Cambridge: Harvard University Press.CrossRefGoogle Scholar
  49. Schumpeter, J. A. (1934). The theory of economic development. Cambridge: Harvard University Press.Google Scholar
  50. Seddon, P. B., Cullen, S., & Willcocks, L. P. (2007). Does Domberger’s theory of ‘the contracting organization’ explain why organizations outsource IT and the levels of satisfaction achieved? European Journal of Information Systems, 16(3), 237–253.CrossRefGoogle Scholar
  51. Smith, W. K., & Tushman, M. L. (2005). Managing strategic contradictions: A top management model for managing innovation streams. Organization Science, 16(5), 522–536.CrossRefGoogle Scholar
  52. Sner, F., & Zhao, L. (2009). Globalization, R&D and the iPod cycle. Journal of International Economics, 77(1), 101–108.CrossRefGoogle Scholar
  53. Straub, D., Weill, P., & Schwaig, K. S. (2008). Strategic dependence on the IT resource and outsourcing: A test of the strategic control model. Information Systems Frontiers, 10(2), 195–210.CrossRefGoogle Scholar
  54. Tapscott, D., & Williams, A. D. (2008). Wikinomics: how mass collaboration changes everything. New York: Portfolio.Google Scholar
  55. Tushman, M., Smith, W. K., Wood, R. C., Westerman, G., & O’Reilly, C. (2010). Organizational designs and innovation streams. Industrial and Corporate Change, 19(5), 1331–1366.CrossRefGoogle Scholar
  56. Von Hippel, E., & Von Krogh, G. (2003). Open source software and the ‘privatecollective’ innovation model: Issues for organization science. Organization Science, 14(2), 209–223.CrossRefGoogle Scholar
  57. Whitley, Edgar A., & Willcocks, Leslie P. (2011). Achieving step-change in outsourcing maturity: Toward collaborative innovation. MIS Quarterly Executive, 10(3), 95–109.Google Scholar
  58. Willcocks, L., Feeny, D., & Olson, N. (2006). Implementing core IS capabilities: Feeny-Willcocks IT governance and management framework revisited. European Management Journal, 24(1), 28–37.CrossRefGoogle Scholar
  59. Woodman, R. W., Sawyer, J. E., & Griffin, R. W. (1993). Toward a theory of organizational creativity. The Academy of Management Review, 18(2), 293–321.Google Scholar
  60. Wüllenweber, K., Beimborn, D., Weitzel, T., & König, W. (2008). The impact of process standardization on business process outsourcing success. Information Systems Frontiers, 10(2), 211–224.CrossRefGoogle Scholar
  61. Yoo, Y., Henfridsson, O., & Lyytinen, K. (2010). The new organizing logic of digital innovation: An agenda for information systems research. Information Systems Research, 21(4), 724–735.CrossRefGoogle Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2014

Authors and Affiliations

  • Benoit A. Aubert
    • 1
    Email author
  • Akie Iriyama
    • 2
  • Ondelansek Kay
    • 3
  • Rajiv Kishore
    • 4
  1. 1.Victoria University of WellingtonWellingtonNew Zealand
  2. 2.Waseda UniversityTokyoJapan
  3. 3.HEC MontrealMontrealCanada
  4. 4.State University of New York at BuffaloBuffaloUSA

Personalised recommendations