• Describe key concepts e.g. outsourcing, insourcing, offshoring, distributed innovation, virtual organization, crowdsourcing, lead users
• Define and describe the general process of vertical disintegration and identify past, present and future trends (e.g. types of activities, industries, geographies, and relationships).
• Demonstrate an understanding of the key views on the debates around these phenomena, describing controversial points and contrasting positions and explaining their weaknesses and strengths.
• Demonstrate knowledge of relevant theories by explaining their assumptions, causal dynamics and processes and how suggested mechanisms affect choices and outcomes of choices.
• 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.
• Formulate success factors as to community building and managing platforms for interaction among supplies and customers.
• Discuss ethical issues, complexities and hurdles surrounding these decisions and devise strategic action plans to tackle them.
• Use case methods to assess real business challenges.

The course is divided into two modules.

In the first module we try to come to terms with the growth of outsourcing, especially over the past few decades, while also discussing in less detail offshoring. We delineate these phenomena. Then we put them in the context of the wider economy and societies, explaining what macro-level factors have produced this growth in outsourcing and how outsourcing affects jobs and prosperity. We pay attention to the shift that has taken place from outsourcing of simple activities towards ever more advanced activities. We also discuss the implications of outsourcing for ethics and corporate social responsibility and how to tackle these issues.

We then focus further on three aspects that firms encounter. First, we ask what the antecedents of outsourcing decisions are, linking these to relevant strategy and organization theories, and again paying particular attention to explaining how firms increasingly outsource more advanced and innovative activities. Second, we consider the consequences of outsourcing decisions for firms, especially in terms of their performance. Third, we zoom in on the outsourcing process, especially on the building of relationships. Building upon this we consider further how practitioners take and implement outsourcing decisions.

The second module takes us to the road ahead. In the era of “crowds”, social networks, collaborative digital development, digital platforms connecting suppliers and customers, it offers a foundation for more efficient organization of development and sourcing of inputs to innovation, and the process of commercialization. The module is structured around the idea that sources of input to new developments and services have become increasingly distributed and that success in outsourcing (i.e. crowd sourcing) of 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 and its variants. Then we shall focus on the modes of open innovation (user innovation, crowdsourcing, virtual R&D).  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? How to organize for sourcing with various individual suppliers of innovation? What explains why individual contributors reveal their solutions and innovations? How do technologies affect the possibilities of outsourcing to a distributed pool of (potential) contributors?


 

Module 1: Outsourcing Revolution Part I

• Bertrand, O., & Mol, M.J. 2013. The antecedents and innovation effects of domestic and offshore R&D outsourcing: The contingent impact of cognitive distance and absorptive capacity. Strategic Management Journal, 34(6), 751-760.

• Holweg, M. and Pil, F. K. 2012. Outsourcing Complex Business Processes: Lessons From an enterprise partnership, California Management Review, 54: 3; 98-115.

• Jensen, P.Ø. and B. Petersen (2013): Global Sourcing of Services: Risk, Process, and Collaborative Architecture. Global Strategy Journal, 3(1): 67-87.

• Lamoreaux, N. R., Raff, D. M. G., & Temin, P. 2003. Beyond markets and hierarchies: Toward a new synthesis of American business history. The American Historical Review, 108(2), 404-433.

• Leiblein, M.J. 2003. The choice of organizational governance form and performance: Predictions from transaction cost, resource-based, and real options theories. Journal of management 29 (6), 937-961.

• Linder, J. C. 2004. Transformational outsourcing. MIT Sloan Management Review 45(2): 52-58.

• Mol, M.J. 2007. Outsourcing: Design, process and performance. Cambridge: Cambridge University Press.

• Weeks, M. and Feeny. D. (2008). Outsourcing: From Cost Management to Innovation and Business Value, California Management Review, 50(4):127-146.

Module 2: Outsourcing Revolution Part II - Crowdsourcing

• Lakhani, K.R. & Jeppesen L.B. (2007) Getting Unusual Suspects to Solve R&D Puzzles. Forethought. Harvard Business Review 85, no. 5 (May)

• Jeppesen, L.B. and Lakhani, K.R., (2010), Marginality and Problem Solving Effectiveness in Broadcast Search, Organization Science, 21 (5) 1016-1033

• Antorini, YM., Muñiz, AM., Askildsen, T. (2012). Collaborating With Customer Communities: Lessons From the Lego Group, MIT Sloan Management Review 53(3) pp. 72-79.

• Boudreau K, Lakhani K. 2013. Using the crowd as an innovation partner. Harvard Business Review 91(4): 60-69, 140.

• Huston, L. and Sakkab, N. (2006). Connect and develop. Inside Procter & Gambles’s New Model for Innovation. Harvard Business Review. March 2006, 58–66.

• Lakhani, Karim R., and Zahra Kanji. "Threadless: The Business of Community."Harvard Business School Video Case 608-707, June 2008