LEARNING PATHS TO GLOBAL OUTSOURCING - FROM COST REDUCTION TO KNOWLEDGE SEEKING

A corporation’s global outsourcing may be seen as the result of a discrete, strategic decision taken in response to an increasing pressure of worldwide competition. However, preliminary empirical evidence of international Danish firms indicates that global sourcing is best described as a learning-by-doing process in which the global outsourcing of a corporation goes through a sequence of stages towards sourcing for innovation. Initially, a corporation’s outsourcing is driven by a desire of cost minimization. Over a period of time the outsourcing experience lessens the cognitive limitations of decisionmakers as to the advantages that can be achieved through outsourcing: the insourcer/vendor may not only offer costs advantages, but also quality improvement and innovation. The quality improvements that global outsourcing may bring about evoke a realization in the corporation that even innovative processes can be outsourced. The authors promote the idea that the add-on of quality improvement and innovation to cost minimization applies across the corporation’s value chain as a whole and is not limited to certain value added activities, such as R&D.

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