The Process of Vertical Dis-Integration: An Evolutionary Perspective on Outsourcing

It is argued that an evolutionaryperspective on firm boundaries with its strongfocus on knowledge, as well as processes ofsearch, learning and capability development isinstrumental in developing a theory of firmboundaries that is close to managerialconcerns. Building on insights in evolutionaryeconomics, propositions are developed regardingscope, speed, and switching costs in theprocess of vertical dis-integration of whichoutsourcing is a particular instance. Currenttheories of firm boundaries give indication whycertain activities might be candidates foroutsourcing by stressing efficiency gains interms of transaction and production costs. They overlook, however, that ``technologicallyseparable interface' between activities might notbe available in codified form, and neglectlearning dynamics that lead to strategicconsequences in terms of capability developmentand adaptability in competitive environments ofvarying dynamics. An evolutionary perspectiveon vertical dis-integration recognises thatfirms make contractual commitments and partlytacit capabilities develop in a path-dependentmanner. The fact that the firm's past casts ashadow on current governance options, andpossibilities to realise them, complicates theprocess of governance change and imposesswitching costs that impact the scope and speedof vertical dis-integration. An evolutionaryperspective on vertical dis-integration alsosuggests considering long-term consequences ofoutsourcing decisions on the dynamiccapabilities of the firm.     

Knowledge Strategies,Firm Types,and Complementarity in Human-Resource Practices

This paper argues that complementary humanresource practices play an important role inthe development of a knowledge based theory offirm. In general, such a theory might beadvanced through investigating complementarycoordination mechanisms as components ofgovernance structures. In particular, humanresource practice combinations contribute ascoordination mechanisms to organise knowledgecreation and exploitation in complex socialrelations. Yet, little is known about why and howinnovation strategies and activity systems ofdifferent firm types relate to combinations ofhuman resource practices. We address this gapby investigating the impact of firm types andknowledge strategies pursued on the applicationof human resource practices in a multisectoralsample of 684 manufacturing and 1,200non-manufacturing firms. We find that theadoption of practices applied differ with thecharacteristics of knowledge strategies andwith firm types. In addition, after controllingfor these differences, we find thatcomplementarity effects among practices arepresent in varying degrees. The implications ofour findings include that there are fewerrestrictions to combinations of coordinationmechanisms than widely assumed.