Determinants of Globalization: Experience about Innovation and Effective Management of Firms

This writeup is based on a discussion about outsourcing based on a changing industry landscape. It takes into consideration a few theories about corporate strategy and the impact of rapid changes in technology. Here are the snippets:

Make vs Buy decisions and the changing landscape of outsourcing- Complex choices due to changes in technology
– Anticipation of future developments
– The capabilities needed are changing
– Developments on the supply side are pushing market trends

Determinants
– Value created by tasks – Value created and captured
– Codification of tasks for specification – Clarity on specifics that create risks
– Ability to monitor, control task performance (imprecise vs. precise) – Can the task be controled and is there an ability to measure process quality. Task outcomes are fuzzy. This also includes structural risks where relationships with business partners may not turn out as expected.

Tradeoffs between operational risk (ability to specify) and structural risk ()
– This nature of trade offs determins the choice of location and form
– Depends strongly upon what is core and what is non-core for the firm. What is the firm’s strategy?

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