On the Receiving End of Outsourcing – Value Creation through Mediation of Alliance Portfolios

Abstract

Purpose

With the disaggregation and fine-slicing of global value chains, offshoring and outsourcing has become increasingly relevant for many MNEs. The purpose of this chapter is to understand the value creation of the receiving partner of outsourcing activities. This is a firm that will have many outsourcing alliances with partners, and one perspective to frame these alliances is the alliance portfolio perspective. We ask – how can a firm on the receiving end of outsourcing create value through the management of its alliance portfolio?

Methodology/approach

Through a case study of a company supplying products to manufacturing industries, we investigate ways in which the company adds value for customers through different models of customer integration. Applying an alliance portfolio perspective, we study benefits of grouping alliances with customers and suppliers.

Findings

Whereas most studies of alliance portfolios have focused on value creation within a portfolio, we find that the mediating capability of coordinating between groups or portfolios of alliances is critical. We also see that the risk aspect is important for firms receiving outsourcing activities.

Research limitations/implications

Our findings have implications for the strategy and organization of the mediating firm on the receiving end of outsourcing. We have only data from one firm, and therefore our findings need to be tested further.

Practical implications

Our findings have implications for managers organizing large alliance portfolios to include risk and mediation capabilities.

Originality/value

The chapter uses original in-depth data.

Citation

Lunnan, R. and Kovalevskaya, D. (2015), "On the Receiving End of Outsourcing – Value Creation through Mediation of Alliance Portfolios", The Future of Global Organizing (Progress in International Business Research, Vol. 10), Emerald Group Publishing Limited, Leeds, pp. 407-435. https://doi.org/10.1108/S1745-886220150000010017