Title: Management of Outsourcing Linkages

Aim: The aim of the project is to study the modes of managing outsourcing activities and relate it to performance.

Countries: Studies will be carried out in China (it would be good to include India and software)

Project Brief: Outsourcing has to a large extent driven the global economy over the last ten years. Garment production was outsourced already back in the 1950’s, but since the liberalisation era started in the 1980’s, outsourcing has caught momentum and covers many industries today.

Outsourcing is narrowly defined as an externalisation of an activity, for example, one or more of the nine generic activities within the Porter framework of the value chain. It is primarily an upstream activity, the aim of which is to bring down production costs (cost efficiency), although it may also be related to market expansion. Outsourcing also takes place downstream, leaving, for example, the distribution to importers. Nevertheless, in the downstream exercise, we often experience outsourcing as the first step, and later, an internalisation takes place, when the company decides to establish a foreign sales subsidiary.

The study aims to develop a typology for various organisational arrangements, including a simple alliance, a facilitator, the establishing of a procurement office or quality control unit abroad etc. Basically, we take each outsourcing category as a way of organising outsourcing and search for the rationale for the organisation mode and the way companies manage the mode.

We will at the outset use a C-Framework including:

The overall hypothesis is that the larger the cultural distance; the more competence to transfer, and the more control you want, the more interactive the management system and the more face-to-face interaction is required.

Participants: Olav Jull Sørensen ( ojs@business.aau.dk) and Wenyan Zhu ( wz@aalborg.dk)

Time for Field Trip: Spring 2007