Introduction
Outsourcing is broadly identified as a relevant and multi-faceted strategic choice, but to date, its actual outcomes are still debated. It is well recognized that the success of outsourcing passes through cultural change , organizational restructuring and the ability to adapt to an extremely complex coordination . The frequency and scope of outsourcing and offshoring have increased constantly during the past twenty years, along with their popularity, which has coincided with other âmanagement fashionsâ (Abrahamson & Fairchild, 1999) and similar âbandwagonsâ (Staw & Epstein, 2000), like business process re-engineering, strategic focalization, creation of shared services and corporate downsizing (Angeli & Grimaldi, 2010; De Fontenay & Gans, 2008; Gospel & Sako, 2010).
Being a multi-faceted strategic choice, outsourcing relates to structuring the entire organization in order to respond adequately to different issues. For this reason, it has been investigated by different streams of literature, such as the ones relating to: (1) strategic management (Prahalad & Hamel, 1990; Sanchez, 1995); (2) organizational approaches (Carlsson, 1994); (3) law and institutions (Domberger, 1998; Hart, 1995); (4) human resources (Leimbach, 2005; Marsden, 2004); (5) internationalization (Grossman & Helpman, 2005; Yu, 2005); (6) operations (Morroni, 1992); and (7) innovation (Van Long, 2005).
Scholarly works on outsourcing have concentrated on the motives for adopting the practice rather than on its actual outcomes and effects, debating the idea of an adoption of outsourcing practices either as a fashion and isomorphic response, or as a more rational, cost and efficiency trade-off solution. Indeed, outsourcing and decentralization do not automaticallyâor necessarilyâlead to a more competitive organization (Lankford & Parsa, 1999).
Literature has argued that âcontracting out might be no more than a temporary enthusiasmâ (Savas, 1993, p. 43), and has noticed that it may be the result of an institutional fashion (Clegg, Burdon, & Nikolova, 2005), or even simply a technique, functioning as myth, that may be ceremonially adopted (Meyer & Rowan, 1977) as it may be selected for efficiency criteria but in practice may deliver far less efficiency than is often claimed (Benson & Littler, 2002; Walker & Walker, 2000). Looking at adoption of outsourcing practices in the public sector, the institutional motives and rationales seem to hold even more, even as a case of mimetic isomorphism (DiMaggio & Powell, 1983), if we consider that contracting out of public sector activities is adopted as a technique to bring the public sector into alignment with the practices of large private business enterprises (Quiggin, 1996).
Those who favour this â institutional fashionâ perspective, tend to emphasize the idea of an adoption of outsourcing practices based on mimetic, isomorphic behaviours (DiMaggio & Powell, 1983), rather than efficiency arguments (Clegg et al., 2005), especially when looking at the lack of understanding and dissatisfaction (Barthelemy, 2003) by top management teams (Rothery & Roberts, 1995) of its specifics and effects. Many contributions have shown that there are several weaknesses of the outsourcing strategy (Barthelemy, 2003; Lankford & Parsa, 1999) such as the fear of losing control of activities given in trust to a third party, and risk of quality erosion, or the reluctance to share confidential or strategic data with third parties, or the difficulty of reusing human resources that can be made redundant after the transfer of some functions to outsourcing companies (Brunetta, Giustiniano, & Marchegiani, 2014). Thus, they tend to explain dissatisfaction and low performance effects of such strategies (Rothery & Roberts, 1995; Doig, Ritter, Speckhals, & Woodson, 2001; Shinkman, 2000; Macinati, 2008; Burmahl, 2000) with the idea of an adoption occurring only as an âinstitutionalâ or âculturally valuedâ phenomenon (Clegg et al., 2005).
On the other hand, a large number of studies focus on strategic motivations, such as an increased ability to focus on core activities by delegating to others activities that are considered of lower strategic importance, coupled with a potential quality increase in those activities requiring skills not available within the company, or even the possibility of acquiring more power to control activities or functions that are difficult to manage (Brunetta et al., 2014). Externalization of work at the task level through outsourcing or offshoring of work has been of interest to sociomaterial scholars (Leonardi & Barley, 2008), as social and material elements become interdependent in the process of organizing. Changes in artefacts provide people with new capabilities, changing their interaction and their reaction to change (Lommerud, Meland, & Straume, 2009).
Notwithstanding strategic motivations, economic rationalesâand especially the quest for cost-efficienciesâremain the most potent tools for the promotion of outsourcing (Clegg et al., 2005), with outsourcing being adopted for activities in which the organization holds no special skills or fails to exploit economies (Brunetta et al., 2014),
Economic, institutional, strategic and financial rationales of outsourcing have thus been well documented (e.g. Giustiniano, Marchegiani, Peruffo, & Pirolo, 2014; Marchegiani, Giustiniano, Peruffo, & Pirolo, 2012), as well as some additional indirect costs, such as transaction costs (Coase, 1937; Williamson, 1989) related to contract monitoring and oversight, generation and negotiation, but also social costs, namely low morale, lower productivity (Dogerlioglu, 2012) and counterproductive anxiety (Barthelemy, 2003). Nonetheless, both the managerial practice and the extant literature still lack a set of consolidated managerial techniques capable of tackling some of the organizational issues relating to outsourcing.
Our aim in this work is to focus on the main organizational issues arising from outsourcing choices, and highlight how managers should adopt proactive techniques and play a definitive role in a companyâs life. Thus, we focus on the following research question: how can managers contribute to the sustainability of the competitive advantage by tackling the main organizational issues relating to outsourcing? We specifically focus on the two main categories of problems: (1) the paradoxes of outsourcing, namely the time span for the evaluation of outcomes and the effects of a multiplicity of stakeholders , and (2) the management of the âliminalâ effects generated by the adoption of outsourcing practices.
The Paradoxes of Outsourcing
The link between the decision to outsource some activities and the expected structural and strategic changes should encourage the adoption of long-term and multi-actor perspectives in the evaluation of the results. The reality is, however, very dif...