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The outsourcing productivity paradox: total outsourcing, organisational innovation, and long run productivity growth
- Source :
- Journal of Evolutionary Economics. 19(2):197-229
- Publisher :
- Springer Nature
-
Abstract
- A growing number of empirical studies find a relationship between the outsourcing of activities and a long term loss of firm productivity growth. The paper addresses this outsourcing productivity paradox by examining the connection between total outsourcing and organisational innovation. We present a model of organisational innovation in which managers raise productive efficiency by identifying organisational architectures that more effectively integrate value-adding activities and administrative routines. As part of this process, managers can internally or externally source an activity. Simulations of the model show that large scale outsourcing restricts the scope for future organisational innovation, leading to lower productivity growth. The findings accord with the empirical data and provide a salutary warning for managers and policy-makers about the long term implications of total outsourcing.
- Subjects :
- Productive efficiency
Entrepreneurship
Economics and Econometrics
Scope (project management)
business.industry
Business, Management and Accounting(all)
General Business, Management and Accounting
Knowledge process outsourcing
Outsourcing
Commerce
Empirical research
Scale (social sciences)
Productivity paradox
business
Industrial organization
Subjects
Details
- Language :
- English
- ISSN :
- 09369937
- Volume :
- 19
- Issue :
- 2
- Database :
- OpenAIRE
- Journal :
- Journal of Evolutionary Economics
- Accession number :
- edsair.doi.dedup.....5c6a17f22e6aacf389777d0afa993a13
- Full Text :
- https://doi.org/10.1007/s00191-008-0122-8