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2012/2013  KAN-CM_V67  Managing Outsourcing in the age of Globalization and Innovation

English Title
Managing Outsourcing in the age of Globalization and Innovation

Course information

Language English
Exam ECTS 7.5 ECTS
Type Elective
Level Full Degree Master
Duration One Quarter
Course period Autumn, First Quarter, Spring
Changes in course schedule may occur
Tuesday 14.25-17.10, week 36-42
Thursday 14.25-17.10, week 40-42
Time Table Please see course schedule at e-Campus
Study board
Study Board for MSc in Economics and Business Administration
Course coordinator
  • Serden Ozcan - Department of Innovation and Organizational Economics
Administration: Shi Hua Chen Kold - shc.ino@cbs.dk
Main Category of the Course
  • Globalization, International Business, markets and studies
  • Innovation and entrepreneurship
  • Supply Chain Management and Logistics
  • Organization
  • Corporate and Business Strategy
Last updated on 13-06-2012
Learning objectives
At the end of the course, the student is expected to be able to:
  • Define and describe the general process of vertical disintegration and identify the past, present and future trends in its nature (e.g. business processes, industry, geography, contract type).
  • Formulate success factors as to geographic location choise, vendor selection and management
  • Discuss ethical issues, complexities and hurdles surrounding these decisions and devise strategic action plans to overcome them
  • Understand and analyze the determinants and the processes of innovation outsourcing and specify success and failure factors.
  • Discuss the different ways in which companies can build business models that allow them to access and leverage the potential of external contributors
  • Debate how traditional R&D outsourcing differ from user or community based sourcing
  • Compare and contrast different types of crowdsourcing business models
  • Discuss how outsourcing of all forms foster entrepreneurial entry and affect start up performance
Master level students – all lines allowed, also external students from Danish and International Universities.
Individual written project (max 15 pgs)
Managing Outsourcing in the age of Globalization and Innovation:
Type of test Home Assignment
Marking scale 7-step scale
Second examiner No second examiner
Exam period Winter Term, Exam at week 43 and week 13
Aids Please, see the detailed regulations below
Duration Please, see the detailed regulations below

Course content

The course is divided into two modules.
In the first module, we focus on the first wave of outsourcing/offshoring that the world has experienced since late 1990s. We lay out the basics. We frame the phenomenon of outsourcing/offshoring, introduce associated concepts and examine its macro-economic implications. We address such questions as whether outsourcing/offshoring generate job losses for the developed world or lead to upgrading of technological capabilities and workforce skills in developing economies.
We then adopt a firm-level approach to investigate questions such as why and how firms outsource/offshore? Which firms are more likely to outsource/offshore? When does outsourcing/offshoring make economic sense? What determines the cost of outsourcing/offshoring? How does technological modularity and organizational design affect the decision to outsource/offshore? When to choose multiple partners/multiple locations? from the perspectives of organizational economics, strategic management and organization theory.

The second module takes us to the road ahead. In the era of social networks, Facebook and cloud computing, it offers a foundation for more efficient organization of innovation and the process of commercialization. The module is structured around the idea that sources of novelty have become increasingly distributed and that success in outsourcing of innovation is strongly related to the ability to tap such sources.
We first examine the emergent organizational form in R&D intensive industries, namely, the virtual organization. Then we shall focus on the modes of open innovation (user innovation, crowdsourcing etc).  We address critical questions such as how to effectively find and/or attract inputs from individuals scattered across the globe? How to evaluate inputs from a range of potential sources of innovation? What economic logic explains that individual contributors reveal their solutions and innovations? How do technologies affect the possibilities of outsourcing to a distributed pool of (potential) contributors?
Finally, we combine both modules into the context of entrepreneurship and seek to answer how outsourcing and offshoring are connected to the process of entrepreneurship and entrepreneurial growth. How do they create opportunities for start-up formation?  What challenges do they pose to potential entrepreneurs? Do they change the rules of the game for resource-constrained founders? Do they enable growth? How do venture capital firms view outsourcing/offshoring


Teaching methods
The course will employ a variety of teaching forms, including lectures and guest lectures by practitioners and discussions on case forum. http://www.cbscaseforum.dk/front
Expected literature

Module 1: Outsourcing Revolution Part I

Harrison, A.E. & McMillan, M.S. (2006). “Dispelling Some Myths About Offshoring”,

Academy of Management Perspectives, 20(4):6-22

Bhagwati, J. Panagariya, A. & Srinavasan, T.N. (2004). “The Muddles over Outsourcing”, Journal of Economic Perspectives, 18(4): 93-114
Weeks, M. and Feeny. D. (2008). Outsourcing: From Cost Management to Innovation and Business Value, California Management Review, 50(4):127-146.

Levy, D. (2005). “Offshoring in the New Global Political Economy”, Journal of

Management Studies, 42(3): 685-694

Fontenay, C. D. & Gans, J. (2009). “A Bargaining Perspective on Strategic Outsourcing and Supply Competition”, Srategic Management Journal, 29: 819-839.

Adler, P.S. (2003). “Making the HR Outsourcing Decision”, Sloan Management Review, 45(1): 53-60

Sturgeon, T.J. (2002). “Modular Production Networks: A New American Model of Industrial Organization”. Industrial and Corporate Change,11 (3) 451-496
Farrell, D. “Smarter Off-shoring”, Harvard Business Review, June 2006
Fontenay, C. D. & Gans, J. (2009). “A Bargaining Perspective on Strategic Outsourcing and Supply Competition”, Strategic Management Journal, 29: 819-839.


Module 2: Outsourcing Revolution Part II

Lakhani, K.R. & Jeppesen L.B. (2007) Getting Unusual Suspects to Solve R&D Puzzles. Forethought. Harvard Business Review 85, no. 5 (May)
Chesbrough, H. W. and Appleyard, M. M. (2007). “Open Innovation and Strategy”, California Management Review, 50(1): 57-76.
Huston, L. and Sakkab, N. (2006). Connect and develop. Inside Procter & Gambles’s New Model for Innovation. Harvard Business Review. March 2006, 58–66.
Tadelis, S. 2007. (2007). "The Innovative Organization: Creating Value through Outsourcing”, California Management Review, 50(1): 261-277.

Last updated on 13-06-2012