Internalisation or externalisation? Examining organisational arrangements for industrial services

Abstract

Purpose

Manufacturing firms primarily organise service provision internally, externally or through a hybrid arrangement. This paper aims to analyse how firm‐, offering‐, and market‐specific factors influence the way in which a firm organises its service provision. In addition, the paper analyses the specific challenges that each organisational arrangement presents for a firm.

Design/methodology/approach

The study employed a qualitative, multiple‐case research design that involved seven manufacturing firms with different organisational arrangements for service provision.

Findings

Contrary to certain explicit assumptions, few firms organise for service provision solely through an in‐house organisation. Analysis of firms in a wide variety of industries has shown that the organisational arrangements (internal, external or hybrid configuration) are contingent on factors such as market strategy, customer relationships, product‐service linkages, internal competences and market channel characteristics.

Research limitations/implications

The paper is an initial attempt to understand the strategic choices that firms make in terms of inter‐organisational arrangements for service provision. The research should be extended by way of a cross‐sectional survey in order to test and further validate the importance of the determinants of the organisational arrangements for service provision.

Originality/value

The paper contributes to the service marketing and management literature by examining factors that determine whether firms organise for service provision internally, externally or through a hybrid configuration. Prior research has not explicitly addressed this issue.

Citation

Kowalkowski, C., Kindström, D. and Witell, L. (2011), "Internalisation or externalisation? Examining organisational arrangements for industrial services", Managing Service Quality: An International Journal, Vol. 21 No. 4, pp. 373-391. https://doi.org/10.1108/09604521111146252