Build-operate-transfer Outsourcing Contracts in Services – Boon or Bane to Emerging Market Vendor Firms?

Build-operate-transfer (BOT) contracting has been widely used in the engineering and construction industry and has recently spread into the service industry domains. Notably, service provider firms from emerging markets, India in particular, are now offering BOT outsourcing contracts in which the client firms are allotted call options, i.e. the right, but not the obligation, to transfer pre-specified assets from the service provider. As such, BOT outsourcing contracts seems to be an interesting contractual novelty that combines the advantages of outsourced and captive offshoring operations. In this paper we investigate under which circumstances a BOT outsourcing contract (i.e. a contract where the client firm exercises its call option) is beneficial, or the opposite, to the emerging market vendor firm. Whether BOT outsourcing contracts are boon or bane to an emerging market vendor basically hinges, we submit, on its internal diffusion of client-specific knowledge and capabilities prior to the execution of the call option.     

Incentive issues in performance-based outsourcing contracts in the UK defence industry: a simulation study

Traditional outsourcing literature has claimed gains for the customer in terms of quality and costs. However, such gains are illusory in outsourcing of high-risk, complex tasks. The use of contracts and governance mechanisms for handling complex procurements is essential in obtaining rewards from outsourcing. Powerful incentives and risks are normally used in industrial service contracts to transfer risks to measure compliance with performance measures. The availability contracts for complex engineering services provision are forms of outsourcing contracts that transfer resources from government to external service providers on a substantial scale. The change moves the contractor role from creating resources to managing resources. Such role change mandates collaboration with customers and suppliers in supply/value chains. The management task is then perceived in terms of linking and optimising alignments rather than increasing service levels. Incentive design is one mechanism for linking the coordination of resources required in availability contracting to the business model. This article studies the impacts of agreed contract type and incentive mechanism on the customer and service provider profits using agent-based discrete event simulation model under multiple risk sharing scenarios.     

How to govern business services exchanges: Contractual and relational issues

With firms concentrating on core competencies, more emphasis has been placed on outsourcing and dealing with external sourcing agents. This has led to a stronger academic focus on buyer–seller exchanges and the corresponding mechanisms for governing these exchanges. This paper gives an overview of previous research investigating the exchange governance phenomenon based on transaction cost theory or co‐operative interorganizational relationships. The results reveal that few research studies have investigated the overall picture of exchange governance, including both contractual and relational governance and taking into account antecedents as well as performance outcomes of the governance mechanisms involved. Moreover, despite the service‐dominant logic shift, limited attention is given to specific service characteristics and their impact on exchange governance. This paper attempts to meld economic and social related antecedents into a model with regard to exchange governance in business services settings. Contractual and relational governance issues and their impact on performance outcomes are also considered. The resulting model indicates that to govern business services exchanges efficiently, more emphasis should be placed on behavioral uncertainty, human and process asset specificity and contractual governance. The paper concludes by discussing several directions for future research.     

Risks in offshore IT outsourcing: A service provider perspective

Offshore outsourcing of Information Technology (IT) services is the prevalent practice in global businesses today. Despite the strategic advantages and cost benefits that offshore outsourcing offers, outsourcing relationships also involve risks, for both the client, as well as the service provider – a fact that is evidenced by the reported failures of such engagements. Some of the prior researches in this area have focused on identifying various types of client risks and their sources. However, the study of risks from a service provider’s perspective has not received due treatment in literature. This study analyses offshore IT outsourcing risks from the perspective of service providers. A case based approach using the principles of grounded theory was used for studying the risks. Theoretical sampling was used to collect data from 5 mid-tier offshore third party service providers based in Bangalore, India. From our coding and analysis three broad categories of service provider risks emerged, namely, macroeconomic, relationship specific and project specific. Relationship maturity, nature of contract, nature of service or project and nature of client were identified as contextual factors which influence the degree of risk.     

Impact of Customer Traffic and Service Process Outsourcing Levels on e‐Retailer Operational Performance

Many service firms deliver services via a mix of internally developed and delivered (i.e., insourced) and externally developed and delivered (i.e., outsourced) service processes. Service process outsourcing is especially common in e‐retailing. Portions of e‐retail customer ordering processes and delivery processes can be digitized and contracted to third‐party vendors. Via outsourcing, service systems change from dyadic to triadic. Prior research examines consumer perceptions of dyadic (consumer to e‐retailer) outcomes, but little research considers service co‐delivery with outsourcing partners (i.e., triadic systems). Literature also does not focus on joint associations of service process outsourcing and customer traffic with e‐retailer operations. We analyze several years of data on North American e‐retailers. We first examine factors associated with e‐retailer outsourcing levels, for front‐end and back‐end service processes. We observe customer traffic is positively associated with future outsourcing. We then examine how outsourcing moderates associations between contemporaneous customer traffic and e‐retailer operational performance, as measured by numbers of processed orders, website response times, and customer satisfaction. Results suggest outsourcing levels are associated with operational outcomes, yet surprisingly, high outsourcing and high traffic jointly may not benefit e‐retailers.     

Transaction‐Specific Investments,Relational Norms,and ERP Customer Satisfaction: A Mediation Analysis*

Integrating the perspectives of transaction cost economics, the resource‐based view, and resource dependency theory, this study analyzes the institutional settings of enterprise resource planning (ERP) implementations in China. Specifically, it examines how bilateral transaction‐specific investments (TSIs) and relational governance mechanisms influence customer satisfaction with ERP implementations. The model is empirically tested using data from on‐site interviews with 208 ERP customers in China. The results demonstrate that the effects of vendors’ and customers’ TSIs on customer satisfaction are facilitated by multiple‐stage micromediational chains. The influence of TSIs on customer satisfaction is mediated by relational norms, and the impact of relational norms on customer satisfaction is bridged by perceived service quality and customer trust. Furthermore, the influence of vendors’ TSIs is stronger than the influence of customers’ TSIs. The findings contribute to business research and practice by providing valuable insights into how ERP vendors and customers should strategize TSIs to enhance relationship performance.     

Adoption of e‐Processes by Service Firms: An Empirical Study of Antecedents

This paper investigates empirically antecedents of the adoption of web‐based processes (e‐processes) by service providers. We examine whether rational efficiency (expressed by expected performance benefits and access to new markets), the bandwagon effect (expressed by external pressure), and barriers (both internal and customer related) influence Internet use for transactions (e‐transactions) and/or to extend the relationships between service providers and their customers (e‐CRM). The findings, based on a sample of 338 service firms, show that rational efficiency and the bandwagon effect drive both types of e‐processes. Conversely, only internal barriers have a negative impact on adoption of e‐processes, while barriers related to customers do not have a significant impact. These findings have important academic and managerial implications, given the limited evidence regarding the implementation of e‐processes in services.     

Why do Emerging Market Firms Engage in Voluntary Environmental Management Practices? A Strategic Choice Perspective

In this paper, we investigate firms’ decisions to engage in voluntary environmental management (VEM) practices within an emerging market context. Drawing on the strategic choice and the resource‐based view perspectives, we report results from a survey of VEM practices – a specific form of self‐governance – drawing on a sample of 519 Turkish firms from various industries to identify important strategic antecedents of firms’ decisions to engage in such practices. We find that as firms become more customer focused, more inclined to pursue a differentiation strategy and subject to a higher level of strategy‐oriented stakeholder focus, they tend to implement higher levels of VEM practices, with important implications for research, policy and practice for both emerging and developed markets.     

Determinants of Interoutsourcing: An Analytical Approach

Interoutsourcing is a round‐way process in which the vendor is its customer's customer and the customer is its vendor's vendor. While interoutsourcing is emerging as a prominent outsourcing strategy in many industries, there are no rigorous analytical studies focusing on this mechanism. In this article, we analytically demonstrate the efficacy of interoutsourcing by comparing it with normal outsourcing. Our results show that, compared with normal outsourcing, interoutsourcing acts as a self‐enforcer of vendor firms' behaviors toward increasing outsourcing service value. However, in situations where there is a mismatch of outsourcing activities, a high degree of incentive that is based on outsourcing service value, and a high cost of capital, interoutsourcing is not preferred to normal outsourcing. We discuss these results in detail and provide managerial implications for firms involved in interoutsourcing decisions.     

Analyzing the Integration of WiMAX and Wi‐Fi Services: Bandwidth Sharing and Channel Collaboration

Several emerging studies have focused on the pricing issue of bandwidth sharing between Wi‐Fi and WiMAX networks; however, most either concentrate on the design of collaborated protocols or figure out the issue without the overall consideration of consumer preferences and contract design. In this study, we explore a wireless service market in which there are two wireless service providers operating Wi‐Fi and WiMAX. One of the research dimensions given in this study is whether wireless service providers implement bandwidth sharing, while the other is whether they make decisions individually or jointly. By involving consumer preferences and a wholesale price contract in the present model, we find that bandwidth sharing would benefit a WiMAX service provider, yet a Wi‐Fi service provider would make no significant savings under a wholesale price contract. In addition, the profit of a WiMAX service provider may increase with Wi‐Fi coverage when bandwidth sharing has been implemented but decrease with Wi‐Fi coverage when both wireless services operate without bandwidth sharing. Furthermore, the WiMAX service provider allocates more capacity when the average usage rate increases, but lowers the expenditure of capacity when the average usage rate is too high.     

Quality‐Speed Competition in Customer‐Intensive Services with Boundedly Rational Customers

We consider a system in which two competing servers provide customer‐intensive services and the service reward is affected by the length of service time. The customers are boundedly rational and choose their service providers according to a logit model. We demonstrate that the service provider revenue function is unimodal in the service rate, its decision variable, and show that the service rate competition has a unique and stable equilibrium. We then study the price decision under three scenarios with the price determined by a revenue‐maximizing firm, a welfare‐maximizing social planner, or two servers in competition. We find that the socially optimal price, subject to the requirement that the customer actual utility must be non‐negative, is always lower than the competition equilibrium price which, in turn, is lower than the revenue‐maximizing monopoly price. However, if the customer actual utility is allowed to be negative in social optimization, the socially optimal price can be higher than the other two prices in a large market.     

Sourcing strategy of Belgian SMEs: empirical evidence for the accounting services

The primary objective of this paper is to examine the sourcing strategy for one business function (accounting services), by looking at the degree of outsourcing for each task of this function. Three research questions are addressed: (1) What sourcing strategy do SMEs use for accounting services? (2) What are the reasons? (3) Is there a link between sourcing strategy and company characteristics? The research design consisted of a postal survey sent out to 1200 managers of SMEs in Belgium. The main results showed that 53% use selective outsourcing, i.e. combining both an inhouse accountant with an accounting service provider. The results also showed that 35% use total insourcing and 12% prefer total outsourcing. Surprisingly, cost reduction is not the main reason for outsourcing. External expertise is the main reason for selectively outsourcing. SMEs select a total insourcing strategy because they want the accounting information at hand. Finally, larger SMEs decide for a total insourcing strategy and prefer to keep the accounting services internal. The conclusions show that future research should focus on the degree of outsourcing. The practical implication of this study is that accounting service providers should highlight their expertise and overcome the disadvantage of remote data analysis to attract more SME-customers.     

基于不同TPL权力的电商供应链决策研究

第三方物流企业受到政府补贴的大力扶持,物流服务显著提升,对消费者网购产生积极影响,逐渐享有供应链话语权。通过分析物流服务供应商的物流成本结构,分别考虑物流投资与物流成本函数,从第三方物流供应链权力视角构建三种电商供应链物流外包权力结构场景(物流服务商主导模式、物流服务商次主导模式和物流服务商跟随模式),综合研究第三方物流企业权力对电商物流外包供应链决策的影响。结果表明,当物流服务商权力越小时,物流服务水平、市场规模、制造商利润和网络零售商利润越大。而不同权力结构下的批发价格、零售价格、物流服务商利润关系受到物流投资系数和物流配送费用的共同影响。当满足条件时,物流服务商跟随模式使得供应链实现帕累托最优。不同第三方物流企业处于不同权力地位时,供应链利润均随物流配送费用的增加、物流投资系数的增加,物流成本系数的减小而增加。据此对不同的物流补贴政策效果进行分析,并为政策制定者和供应链主体提供参考性意见。     

How Provider Selection and Management Contribute to Successful Innovation Outsourcing: An Empirical Study at Siemens

It is becoming increasingly common to involve external technology providers in developing new technologies and new products. Two important phases involved in working with technology vendors are vendor selection and vendor management. Because for both steps theory development of key decision guidelines is still immature, we use detailed case studies of 31 innovation outsourcing projects at Siemens to develop grounded theory on provider selection criteria and on project management success drivers. A selection criterion often associated with successful outsourcing is the provider's “track record” or previous experience. Our cases suggest that there is no standard “track record” for success but that a “match” between the client firm's outsourcing motivation and the provider's strengths appears to be a necessary condition for a successful outsourcing collaboration. As to the second phase—managing the vendor—we identify a number of operational project success drivers. There seems to be no universal checklist, but the most important drivers seem to be contingent on the type of vendor chosen and on the maturity of the technology. We compare five provider types—universities, competitors, customers, start‐up companies, and component suppliers—and find that some success drivers are common to all providers, while others are relevant only for certain types of provider. Moreover, drivers in the case of a mature technology are more focused on successful transfer to manufacturing than on development itself. Our findings offer guidelines for innovation managers on how to select innovation providers and how to manage them during the project.     

The effects of internal resources and partnership quality on firm performance: An examination of Indian BPO providers

Firms from developed nations are increasingly resorting to business process outsourcing (BPO) as part of their global sourcing strategy. Although BPO is a growing practice, there has been limited empirical attention in understanding the phenomenon, particularly from the perspective of provider firms that execute important business processes for their overseas clients. In this paper we focus on the resources and capabilities that are utilized by the providers in fulfilling their clients' sourcing needs. Using resource-based view and social exchange as theoretical foundations, we argue that providers' human capital, organizational capital, management capability, and partnership quality are crucial assets that are deemed valuable by the clients and are utilized by the providers in attaining higher performance. Using a sample of Indian BPO providers, we empirically test three models (direct, mediating and moderating) to understand how these assets impact firm-level performance. Results show that resources and capabilities relate to performance in varying measures and partnership quality has partial-mediating and moderating effects on these relationships. We conclude by discussing the theoretical and practical implications of the study and highlighting avenues of future inquiry.     

Contract functions in service exchange governance: evidence from logistics outsourcing

The logistics outsourcing literature emphasises relational governance mechanisms and has underplayed the role of formal contractual provisions. This paper empirically examines the multiple functions that contracts perform in the governance of service exchanges. Codification, safeguarding, coordination and adaptation functions are linked to contract specification schedules, payment mechanisms, (early) termination rights, performance review and communication provisions, service variations clauses and renegotiation provisions. Contracts may also embody exchange- or partner-specific learning, albeit to a limited extent. Overall, the empirical findings lend support to the functional view of contracting. The functionality of contracts extends beyond safeguarding against opportunism and financial losses. In addition to offering economic and legal safeguards, contracts are used to coordinate and adapt service exchanges in the face of complexity and uncertainty.     

基于异质性顾客心理期望等待时间的优先权服务定价研究

本文以非抢占式M/M/1排队系统为背景,以企业收益最大化为目标,基于顾客异质性(单位时间等待成本不同)将顾客分为两类,针对顾客的心理期望等待时间对服务提供商最优定价策略的影响进行研究。首先研究优先权顾客心理期望等待时间对企业收益的影响以及相应的优先权定价,然后研究优先权顾客和普通顾客同时存在心理期望等待时间对企业收益的影响和相应的优先权定价。研究表明:仅考虑优先权顾客的心理期望等待时间,企业应通过提高优先权定价来获得最优收益;当优先权顾客和普通顾客同时存在心理期望等待时间时,企业仍然采取提高优先权定价的策略,若普通顾客的价值大(获取服务的基本费用大),企业应对普通顾客提供一定的折扣来消除其心理期望等待时间增加企业收益;如果普通顾客的价值较小,企业应"有意"流失部分普通顾客,吸引更多顾客到优先权队列获取服务来获得更多收益。本文研究对于服务提供商在考虑顾客心理期望等待时间基础上设置最合理的队列机制有一定的指导意义和实际应用价值。     

产品后市场服务渠道选择:垂直式或网络化?

制造业服务化让企业将核心业务向服务领域延伸.在运营成本和服务能力的约束下, 为了给顾客提供高水平服务, 后市场服务可以由供应商自主提供, 或由第三方服务商提供, 由此分别形成了垂直式渠道和网络化渠道.针对这两种供应链渠道分别进行了建模优化, 通过对比两种供应链结构下的渠道服务水平、市场供给量和供应链上各成员的利润, 讨论了供应链的最优渠道结构选择.研究结果表明, 只要服务成本不变, 供应链的渠道结构不会改变服务水平.供应链最优的渠道结构由供应商与第三方服务商的服务成本差异决定, 只要第三方服务商的服务成本足够低, 供应商就应该选择服务外包和网络化渠道, 从而实现帕累托改进.     

Examining the Antecedents and Consequences of Corporate Reputation: A Customer Perspective

This paper extends previous work to examine the antecedents and customer-related consequences of corporate reputation for one important stakeholder group, customers, and within a special service sector where product and corporate associations are synonymous. We begin by linking the concept of corporate reputation to related concepts. Then, using structural equation modelling on customer survey data (n=511), we examine the impact of customer satisfaction and trust on corporate reputation, as well as how corporate reputation affects customer loyalty and word of mouth behaviour. The management implications of these results are discussed.     

关系契约治理与外包合作绩效——对日离岸软件外包项目的实证研究

对日离岸软件外包项目具有典型的关系契约特性,现有文献对软件外包中的关系契约治理及对合作绩效的影响还缺乏系统的理论分析和实证研究。信任、交流和相互适应调整作为重要的关系规范,在对日软件外包关系契约治理中具有重要意义。本研究根据访谈和110个项目的数据实证检验了关系规范对离岸软件外包项目绩效的影响。通过结构方程模型方法发现,交流的有效性对于项目质量和供应商成本控制绩效有积极影响,相互适应调整对于成本控制绩效也有积极影响。这个发现有助于构建有效的关系契约治理机制,促进软件外包产业发展。