Making the business process outsourcing decision: why distance matters

Research output: Contribution to journalArticle

7 Citations (Scopus)

Abstract

Purpose – The aim of this paper is to develop a framework that incorporates both firm- and process-level factors for understanding location distance choice in the business process outsourcing (BPO) decision.Design/methodology/approach – The research involved undertaking in-depth case study analysis of a number of BPO decisions in six German companies, and employing transaction cost economics (TCE) and the resource-based view (RBV) as a theoretical basis.Findings – The findings have shown that existing literature in the operations management (OM) literature does not provide a complete understanding of the complexities of location distance choice in the BPO decision. This decision requires an understanding of a range of factors at both the firm- and process-level. The findings here enhance our understanding of how these factors interact to influence the potential distance options.Practical implications - The findings have shown how organisations can influence the factors that affect the location distance choice including modularising business processes, developing outsourcing capabilities, and supplementing internal skills in areas such as cultural management and performance monitoring.Originality/value – This is one of the first studies in the OM field to analyse how organisations make the decision in relation to local, nearshore, and offshore location distance options. The paper has highlighted the importance of OM concepts such as performance management and continuous improvement to this phenomenon, and the paper has offered a number of important areas for further research.
LanguageEnglish
Pages1037-1064
JournalInternational Journal of Operations & Production Management
Volume36
Issue number9
DOIs
Publication statusPublished - 5 Sep 2016

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Outsourcing
Industry
Business process outsourcing
Economics
Factors
Monitoring
Operations management
Costs

Keywords

  • Outsourcing
  • Case study
  • Transaction cost economics
  • Resource-based view

Cite this

@article{8954fd4449d8433f894fa0248927e09e,
title = "Making the business process outsourcing decision: why distance matters",
abstract = "Purpose – The aim of this paper is to develop a framework that incorporates both firm- and process-level factors for understanding location distance choice in the business process outsourcing (BPO) decision.Design/methodology/approach – The research involved undertaking in-depth case study analysis of a number of BPO decisions in six German companies, and employing transaction cost economics (TCE) and the resource-based view (RBV) as a theoretical basis.Findings – The findings have shown that existing literature in the operations management (OM) literature does not provide a complete understanding of the complexities of location distance choice in the BPO decision. This decision requires an understanding of a range of factors at both the firm- and process-level. The findings here enhance our understanding of how these factors interact to influence the potential distance options.Practical implications - The findings have shown how organisations can influence the factors that affect the location distance choice including modularising business processes, developing outsourcing capabilities, and supplementing internal skills in areas such as cultural management and performance monitoring.Originality/value – This is one of the first studies in the OM field to analyse how organisations make the decision in relation to local, nearshore, and offshore location distance options. The paper has highlighted the importance of OM concepts such as performance management and continuous improvement to this phenomenon, and the paper has offered a number of important areas for further research.",
keywords = "Outsourcing, Case study, Transaction cost economics, Resource-based view",
author = "Martina Gerbl and Ronan McIvor and Paul Humphreys",
note = "Reference text: Apte, U. and Mason, R. (1995), “Global disaggregation of information-intensive services”, Management Science, Vol. 41 No. 7, pp. 1250-1262. Argyres, N. and Mayer, K. (2007), “Contract design as a firm capability: an integration of learning and transaction cost perspectives”, Academy of Management Review, Vol. 32 No. 4, pp. 1060-1077. Aron, R. and Singh, J. (2005), “Getting offshoring right”, Harvard Business Review, Vol. 83 No. 12 pp 135-143. Bahli, B. and Rivard, S. (2005), “Validating measures of information technology outsourcing risk factors”, Omega, Vol. 33 No. 2, pp. 175-187. Barney, J. (1991), “Firm resources and sustained competitive advantage”, Journal of Management, Vol. 17 No. 1, pp. 49-61. Bernard, R. (2000), Social Research Methods: Qualitative and Quantitative Approaches, Sage Publications, Thousand Oaks, CA. Bunyaratavej, K., Hahn, E. and Doh, J. (2007), “International offshoring of services: a parity study”, Journal of International Management, Vol. 13 No. 1, pp. 7-21. 1059 Making the BPO decision Downloaded by University of Ulster At 01:59 06 September 2016 (PT) Chase, R. (1981), “The customer contact approach to services: theoretical bases and practical extensions”, Operations research, Vol. 29 No. 4, pp. 698-706. Currie, W., Michell, V. and Abanishe, O. (2008), “Knowledge process outsourcing in financial services: the vendor perspective”, European Management Journal, Vol. 26 No. 2, pp. 94-104. D’andrade, R. (1995), The Development of Cognitive Anthropology, Cambridge University Press, Cambridge. Davenport, T. (2005), “The coming commoditization of processes”, Harvard Business Review, Vol. 83 No. 6, pp. 100-108. Deng, C., Mao, J. and Wang, G. (2013), “An empirical study on the source of vendors’ relational performance in offshore information systems outsourcing”, International Journal of Information Management, Vol. 33 No. 1, pp. 10-19. Doh, J.P., Bunyaratavej, K. and Hahn, E.G. (2009), “Separable but not equal: the location determinants of discrete services offshoring activities”, Journal of International Business Studies, Vol. 40 No. 6, pp. 926-943. Dunning, J. (1988), Explaining International Production, Unwin Hyman, London. Eisenhardt, K. (1989), “Building theories from case study research”, Academy of Management Review, Vol. 14 No. 4, pp. 532-550. Ellram, L., Tate, W. and Billington, C. (2008), “Offshore outsourcing of professional services: a transaction cost economics perspective”, Journal of Operations Management, Vol. 26 No. 2, pp. 148-163. Glaser, B. and Strauss, A. (1967), The Discovery of Grounded Theory: Strategies of Qualitative Research, Wiedenfeld and Nicolson, London. Gospel, H. and Sako, M. (2010), “The unbundling of corporate functions: the evolution of shared services and outsourcing in human resource management”, Industrial and Corporate Change, Vol. 19 No. 5, pp. 1367-1396. Gummesson, E. (1991), Qualitative Methods in Management, Sage, London. Handley, S. and Benton, W. (2009), “Unlocking the business outsourcing process model”, Journal of Operations Management, Vol. 27 No. 5, pp. 344-361. H{\"a}t{\"o}nen, J. (2009), “Making the locational choice: a case approach to the development of a theory of offshore outsourcing and internationalization”, Journal of International Management, Vol. 15 No. 1, pp. 61-76. Holcomb, T. and Hitt, M. (2007), “Toward a model of strategic outsourcing”, Journal of Operations Management, Vol. 25 No. 2, pp. 464-481. Hutzschenreuter, T., Lewin, A.Y. and Ressler, W. (2011), “The growth of white-collar offshoring: Germany and the US from 1980 to 2006”, European Management Journal, Vol. 29 No. 4, pp. 245-259. Javalgi, R. and Martin, C. (2007), “Internationalization of services: identifying the building-blocks for future research”, Journal of Services Marketing, Vol. 21 No. 6, pp. 391-397. Javalgi, R., Joseph, W., Granot, E. and Gross, A. (2013), “Strategies for sustaining the edge in offshore outsourcing of services: the case of India”, Journal of Business & Industrial Marketing, Vol. 28 No. 6, pp. 475-486. Jayaraman, V., Narayanan, S., Luo, Y. and Swaminathan, J. (2013), “Offshoring business process services and governance control mechanisms: an examination of service providers in India”, Production & Operations Management, Vol. 22 No. 2, pp. 314-334. Jensen, P. (2012), “A passage to India: a dual case study of activities, processes and resources in offshore outsourcing of advanced services”, Journal of World Business, Vol. 47 No. 2, pp. 311-326. Jensen, P. and Pedersen, T. (2011), “The economic geography of offshoring: the fit between activities and local context”, Journal of Management Studies, Vol. 48 No. 2, pp. 352-372. Kouvelis, P. and Li, J. (2013), “Offshore outsourcing, yield uncertainty, and contingency responses”, Production and Operations Management, Vol. 22 No. 1, pp. 164-177. Lacity, M., Solomon, S., Yan, A. and Willcocks, L. (2011), “Business process outsourcing studies: a critical review and research directions”, Journal of Information Technology, Vol. 26 No. 4, pp. 221-258. Lahiri, S. and Kedia, B. (2011), “Co-evolution of institutional and organizational factors in explaining offshore outsourcing”, International Business Review, Vol. 20 No. 3, pp. 252-263. Lampel, J. and Bhalla, A. (2011), “Living with offshoring: the impact of offshoring on the evolution of organizational configurations”, Journal of World Business, Vol. 46 No. 3, pp. 346-358. Leiblein, M.J. and Miller, D.J. (2003), “An empirical examination of transaction- and firm-level influences on the vertical boundaries of the firm”, Strategic Management Journal, Vol. 24 No. 9, pp. 839-859. McIvor, R. (2009), “How the transaction cost theories and resource-based theories of the firm inform outsourcing evaluation”, Journal of Operations Management, Vol. 27 No. 1, pp. 45-63. McIvor, R. (2010), Global Services Outsourcing, Cambridge University Press, Cambridge. McIvor, R., Humphreys, P., Wall, A. and McKittrick, A. (2009), “Outsourcing and performance management: lessons from a financial services organisation”, International Journal of Operations and Production Management, Vol. 29 No. 10, pp. 1025-1048. Mahmoodzadeh, E., Jalalinia, S. and Yazdi, F.N. (2009), “A business process outsourcing framework based on business process management and knowledge management”, Business Process Management Journal, Vol. 15 No. 6, pp. 845-864. Malik, A. and Blumenfeld, S. (2012), “Six Sigma, quality management systems and the development of organisational learning capability: evidence from four business process outsourcing organisations in India”, International Journal of Quality & Reliability Management, Vol. 29 No. 1, pp. 71-91. Mani, D., Barua, A. and Whinston, A. (2010), “An empirical analysis of the impact of information capabilities design on business process outsourcing performance”, MIS Quarterly, Vol. 34 No. 1, pp. 39-62. Mani, D., Srikanth, K. and Bharadwaj, A. (2014), “Efficacy of R&D work in offshore captive centers: an empirical study of task characteristics, coordination mechanisms, and performance”, Information Systems Research, Vol. 25 No. 4, pp. 846-864. Marshall, D., Ambrose, E., McIvor, R. and Lamming, R. (2015), “Self-interest or the greater good: how political and rational dynamics influence the outsourcing process”, International Journal of Operations & Production Management, Vol. 35 No. 4, pp. 547-576. Maskell, P., Pedersen, T., Petersen, B. and Dick-Nielsen, J. (2007), “Learning paths to offshore outsourcing: from cost reduction to knowledge seeking”, Industry & Innovation, Vol. 14 No. 3, pp. 239-257. Metters, R. (2008), “A typology of offshoring and outsourcing in electronically transmitted services”, Journal of Operations Management, Vol. 26 No. 2, pp. 198-211. Metters, R. and Vargas, V. (2000), “A typology of de-coupling strategies in mixed services”, Journal of Operations Management, Vol. 18 No. 6, pp. 663-682. Miles, M.B. and Huberman, A.M. (1994), Qualitative Data Analysis: An Expanded Sourcebook, Sage Publications, Beverly Hills. Mithas, S. and Whitaker, J. (2007), “Is the world flat or spiky? Information intensity, skills, and global service disaggregation”, Information Systems Research, Vol. 18 No. 3, pp. 237-259. Oshri, I. and Van Uhm, B. (2012), “A historical review of the information technology and business process captive centre sector”, Journal of Information Technology, Vol. 27 No. 4, pp. 270-284. Oshri, I., Kotlarsky, J. and Willcocks, L.P. (2015), The Handbook of Global Outsourcing and Offshoring , 3rd ed., Palgrave Macmillan, Basingstoke. Peteraf, M.A. (1993), “The cornerstones of competitive advantage: a resource-based view”, Strategic Management Journal, Vol. 14 No. 3, pp. 179-191. Raisinghani, M., Arora, A., Baylor, E., Brown-Philips, S., Coleman, C. and Craig, K. (2010), “Virtual project management of globally outsourced it projects”, International Journal of Management and Information Systems, Vol. 14 No. 5, pp. 1-7. Ralston, D., Holt, D., Terpstra, R. and Kai-Cheng, Y. (2008), “The impact of national culture and economic ideology on managerial work values: a study of the United States, Russia, Japan, and China”, Journal of International Business Studies, Vol. 39 No. 1, pp. 8-26. Ranganathan, C. and Balaji, S. (2007), “Critical capabilities for offshore outsourcing of information systems”, MIS Quarterly Executive, Vol. 6 No. 3, pp. 147-164. Roza, M., Van den Bosch, F. and Volberda, H. (2011), “Offshoring strategy: motives, functions, locations, and governance modes of small, medium-sized and large firms”, International Business Review, Vol. 20 No. 3, pp. 314-323. Sako, M. (2009), “Globalization of knowledge-intensive professional services”, Communications of the ACM, Vol. 52 No. 7, pp. 31-33. Saunders, M., Lewis, P. and Thornhill, A. (2009), Research Methods for Business Students, 5th ed., Prentice Hall, Harlow. Schmeisser, B. (2013), “A systematic review of literature on offshoring of value chain activities”, Journal of International Management, Vol. 19 No. 4, pp. 390-406. Schmenner, R. (1986), “How can service businesses survive and prosper?”, Sloan Management Review, Vol. 27 No. 3, pp. 21-32. Steven, A.B., Dong, Y. and Corsi, T. (2014), “Global sourcing and quality recalls: an empirical study of outsourcing-supplier concentration-product recalls linkages”, Journal of Operations Management, Vol. 32 No. 5, pp. 241-253. Strauss, A. and Corbin, J. (1998), Basics of Qualitative Research: Techniques and Procedures for Developing Grounded Theory, 2nd ed., Sage, Thousand Oaks, CA. Stringfellow, A., Teagarden, M.B. and Nie, W. (2008), “Invisible costs in offshoring services work”, Journal of Operations Management, Vol. 26 No. 2, pp. 164-179. Tas, J. and Sunder, S. (2004), “Financial services business process outsourcing”, Communications of the ACM, Vol. 47 No. 5, pp. 50-52. Williamson, O.E. (1975), Markets and Hierarchies, Free Press, New York, NY. Williamson, O.E. (1985), The Economic Institutions of Capitalism: Firms, Markets and Relational Contracting, Free Press, New York, NY. Wuyts, S., Rindfleisch, A. and Citrin, A. (2015), “Outsourcing customer support: the role of provider customer focus”, Journal of Operations Management, Vol. 35 No. 1, pp. 40-55. Yin, R. (2009), Case Study Research Design and Methods, 4th ed., Sage. Youngdahl, W. and Ramaswamy, K. (2008), “Offshoring knowledge and service work: a conceptual model and research agenda”, Journal of Operations Management, Vol. 26 No. 2, pp. 212-221. Youngdahl, W.E., Ramaswamy, K. and Dash, K.C. (2010), “Service offshoring: the evolution of offshore operations”, International Journal of Operations & Production Management, Vol. 30 No. 8, pp. 798-820. Zander, U. and Kogut, B. (1995), “Knowledge and the speed of the transfer and imitation of organizational capabilities: an empirical test”, Organization Science, Vol. 6 No. 1, pp. 76-92. Zomerdijk, L. and Vries, J. (2007), “Structuring front office and back office work in service delivery systems: an empirical study of three design decisions”, International Journal of Operations & Production Management, Vol. 27 No. 1, pp. 108-131. Further reading Dibbern, J., Goles, T., Hirschheim, R. and Jayatilaka, B. (2004), “Information systems outsourcing: a survey and analysis of the literature”, Data Base for Advanced Information Systems, Vol. 35 No. 4, pp. 6-102. Kogut, B. and Zander, U. (1993), “Knowledge of the firm and the evolutionary theory of the multinational corporation”, Journal of International Business Studies, Vol. 24 No. 4, pp. 625-645. McIvor, R. (2008), “What is the right outsourcing strategy for your process?”, European Management Journal, Vol. 26 No. 1, pp. 24-34. Tanriverdi, H., Konana, P. and Ge, L. (2007), “The choice of sourcing mechanisms for business processes”, Information Systems Research, Vol. 18 No. 3, pp. 280-299.",
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month = "9",
day = "5",
doi = "10.1108/IJOPM-04-2014-0192",
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Making the business process outsourcing decision: why distance matters. / Gerbl, Martina; McIvor, Ronan; Humphreys, Paul.

Vol. 36, No. 9, 05.09.2016, p. 1037-1064.

Research output: Contribution to journalArticle

TY - JOUR

T1 - Making the business process outsourcing decision: why distance matters

AU - Gerbl, Martina

AU - McIvor, Ronan

AU - Humphreys, Paul

N1 - Reference text: Apte, U. and Mason, R. (1995), “Global disaggregation of information-intensive services”, Management Science, Vol. 41 No. 7, pp. 1250-1262. Argyres, N. and Mayer, K. (2007), “Contract design as a firm capability: an integration of learning and transaction cost perspectives”, Academy of Management Review, Vol. 32 No. 4, pp. 1060-1077. Aron, R. and Singh, J. (2005), “Getting offshoring right”, Harvard Business Review, Vol. 83 No. 12 pp 135-143. Bahli, B. and Rivard, S. (2005), “Validating measures of information technology outsourcing risk factors”, Omega, Vol. 33 No. 2, pp. 175-187. Barney, J. (1991), “Firm resources and sustained competitive advantage”, Journal of Management, Vol. 17 No. 1, pp. 49-61. Bernard, R. (2000), Social Research Methods: Qualitative and Quantitative Approaches, Sage Publications, Thousand Oaks, CA. Bunyaratavej, K., Hahn, E. and Doh, J. (2007), “International offshoring of services: a parity study”, Journal of International Management, Vol. 13 No. 1, pp. 7-21. 1059 Making the BPO decision Downloaded by University of Ulster At 01:59 06 September 2016 (PT) Chase, R. (1981), “The customer contact approach to services: theoretical bases and practical extensions”, Operations research, Vol. 29 No. 4, pp. 698-706. Currie, W., Michell, V. and Abanishe, O. (2008), “Knowledge process outsourcing in financial services: the vendor perspective”, European Management Journal, Vol. 26 No. 2, pp. 94-104. D’andrade, R. (1995), The Development of Cognitive Anthropology, Cambridge University Press, Cambridge. Davenport, T. (2005), “The coming commoditization of processes”, Harvard Business Review, Vol. 83 No. 6, pp. 100-108. Deng, C., Mao, J. and Wang, G. (2013), “An empirical study on the source of vendors’ relational performance in offshore information systems outsourcing”, International Journal of Information Management, Vol. 33 No. 1, pp. 10-19. Doh, J.P., Bunyaratavej, K. and Hahn, E.G. (2009), “Separable but not equal: the location determinants of discrete services offshoring activities”, Journal of International Business Studies, Vol. 40 No. 6, pp. 926-943. Dunning, J. (1988), Explaining International Production, Unwin Hyman, London. Eisenhardt, K. (1989), “Building theories from case study research”, Academy of Management Review, Vol. 14 No. 4, pp. 532-550. Ellram, L., Tate, W. and Billington, C. (2008), “Offshore outsourcing of professional services: a transaction cost economics perspective”, Journal of Operations Management, Vol. 26 No. 2, pp. 148-163. Glaser, B. and Strauss, A. (1967), The Discovery of Grounded Theory: Strategies of Qualitative Research, Wiedenfeld and Nicolson, London. Gospel, H. and Sako, M. (2010), “The unbundling of corporate functions: the evolution of shared services and outsourcing in human resource management”, Industrial and Corporate Change, Vol. 19 No. 5, pp. 1367-1396. Gummesson, E. (1991), Qualitative Methods in Management, Sage, London. Handley, S. and Benton, W. (2009), “Unlocking the business outsourcing process model”, Journal of Operations Management, Vol. 27 No. 5, pp. 344-361. Hätönen, J. (2009), “Making the locational choice: a case approach to the development of a theory of offshore outsourcing and internationalization”, Journal of International Management, Vol. 15 No. 1, pp. 61-76. Holcomb, T. and Hitt, M. (2007), “Toward a model of strategic outsourcing”, Journal of Operations Management, Vol. 25 No. 2, pp. 464-481. Hutzschenreuter, T., Lewin, A.Y. and Ressler, W. (2011), “The growth of white-collar offshoring: Germany and the US from 1980 to 2006”, European Management Journal, Vol. 29 No. 4, pp. 245-259. Javalgi, R. and Martin, C. (2007), “Internationalization of services: identifying the building-blocks for future research”, Journal of Services Marketing, Vol. 21 No. 6, pp. 391-397. Javalgi, R., Joseph, W., Granot, E. and Gross, A. (2013), “Strategies for sustaining the edge in offshore outsourcing of services: the case of India”, Journal of Business & Industrial Marketing, Vol. 28 No. 6, pp. 475-486. Jayaraman, V., Narayanan, S., Luo, Y. and Swaminathan, J. (2013), “Offshoring business process services and governance control mechanisms: an examination of service providers in India”, Production & Operations Management, Vol. 22 No. 2, pp. 314-334. Jensen, P. (2012), “A passage to India: a dual case study of activities, processes and resources in offshore outsourcing of advanced services”, Journal of World Business, Vol. 47 No. 2, pp. 311-326. Jensen, P. and Pedersen, T. (2011), “The economic geography of offshoring: the fit between activities and local context”, Journal of Management Studies, Vol. 48 No. 2, pp. 352-372. Kouvelis, P. and Li, J. (2013), “Offshore outsourcing, yield uncertainty, and contingency responses”, Production and Operations Management, Vol. 22 No. 1, pp. 164-177. Lacity, M., Solomon, S., Yan, A. and Willcocks, L. (2011), “Business process outsourcing studies: a critical review and research directions”, Journal of Information Technology, Vol. 26 No. 4, pp. 221-258. Lahiri, S. and Kedia, B. (2011), “Co-evolution of institutional and organizational factors in explaining offshore outsourcing”, International Business Review, Vol. 20 No. 3, pp. 252-263. Lampel, J. and Bhalla, A. (2011), “Living with offshoring: the impact of offshoring on the evolution of organizational configurations”, Journal of World Business, Vol. 46 No. 3, pp. 346-358. Leiblein, M.J. and Miller, D.J. (2003), “An empirical examination of transaction- and firm-level influences on the vertical boundaries of the firm”, Strategic Management Journal, Vol. 24 No. 9, pp. 839-859. McIvor, R. (2009), “How the transaction cost theories and resource-based theories of the firm inform outsourcing evaluation”, Journal of Operations Management, Vol. 27 No. 1, pp. 45-63. McIvor, R. (2010), Global Services Outsourcing, Cambridge University Press, Cambridge. McIvor, R., Humphreys, P., Wall, A. and McKittrick, A. (2009), “Outsourcing and performance management: lessons from a financial services organisation”, International Journal of Operations and Production Management, Vol. 29 No. 10, pp. 1025-1048. Mahmoodzadeh, E., Jalalinia, S. and Yazdi, F.N. (2009), “A business process outsourcing framework based on business process management and knowledge management”, Business Process Management Journal, Vol. 15 No. 6, pp. 845-864. Malik, A. and Blumenfeld, S. (2012), “Six Sigma, quality management systems and the development of organisational learning capability: evidence from four business process outsourcing organisations in India”, International Journal of Quality & Reliability Management, Vol. 29 No. 1, pp. 71-91. Mani, D., Barua, A. and Whinston, A. (2010), “An empirical analysis of the impact of information capabilities design on business process outsourcing performance”, MIS Quarterly, Vol. 34 No. 1, pp. 39-62. Mani, D., Srikanth, K. and Bharadwaj, A. (2014), “Efficacy of R&D work in offshore captive centers: an empirical study of task characteristics, coordination mechanisms, and performance”, Information Systems Research, Vol. 25 No. 4, pp. 846-864. Marshall, D., Ambrose, E., McIvor, R. and Lamming, R. (2015), “Self-interest or the greater good: how political and rational dynamics influence the outsourcing process”, International Journal of Operations & Production Management, Vol. 35 No. 4, pp. 547-576. Maskell, P., Pedersen, T., Petersen, B. and Dick-Nielsen, J. (2007), “Learning paths to offshore outsourcing: from cost reduction to knowledge seeking”, Industry & Innovation, Vol. 14 No. 3, pp. 239-257. Metters, R. (2008), “A typology of offshoring and outsourcing in electronically transmitted services”, Journal of Operations Management, Vol. 26 No. 2, pp. 198-211. Metters, R. and Vargas, V. (2000), “A typology of de-coupling strategies in mixed services”, Journal of Operations Management, Vol. 18 No. 6, pp. 663-682. Miles, M.B. and Huberman, A.M. (1994), Qualitative Data Analysis: An Expanded Sourcebook, Sage Publications, Beverly Hills. Mithas, S. and Whitaker, J. (2007), “Is the world flat or spiky? Information intensity, skills, and global service disaggregation”, Information Systems Research, Vol. 18 No. 3, pp. 237-259. Oshri, I. and Van Uhm, B. (2012), “A historical review of the information technology and business process captive centre sector”, Journal of Information Technology, Vol. 27 No. 4, pp. 270-284. Oshri, I., Kotlarsky, J. and Willcocks, L.P. (2015), The Handbook of Global Outsourcing and Offshoring , 3rd ed., Palgrave Macmillan, Basingstoke. Peteraf, M.A. (1993), “The cornerstones of competitive advantage: a resource-based view”, Strategic Management Journal, Vol. 14 No. 3, pp. 179-191. Raisinghani, M., Arora, A., Baylor, E., Brown-Philips, S., Coleman, C. and Craig, K. (2010), “Virtual project management of globally outsourced it projects”, International Journal of Management and Information Systems, Vol. 14 No. 5, pp. 1-7. Ralston, D., Holt, D., Terpstra, R. and Kai-Cheng, Y. (2008), “The impact of national culture and economic ideology on managerial work values: a study of the United States, Russia, Japan, and China”, Journal of International Business Studies, Vol. 39 No. 1, pp. 8-26. Ranganathan, C. and Balaji, S. (2007), “Critical capabilities for offshore outsourcing of information systems”, MIS Quarterly Executive, Vol. 6 No. 3, pp. 147-164. Roza, M., Van den Bosch, F. and Volberda, H. (2011), “Offshoring strategy: motives, functions, locations, and governance modes of small, medium-sized and large firms”, International Business Review, Vol. 20 No. 3, pp. 314-323. Sako, M. (2009), “Globalization of knowledge-intensive professional services”, Communications of the ACM, Vol. 52 No. 7, pp. 31-33. Saunders, M., Lewis, P. and Thornhill, A. (2009), Research Methods for Business Students, 5th ed., Prentice Hall, Harlow. Schmeisser, B. (2013), “A systematic review of literature on offshoring of value chain activities”, Journal of International Management, Vol. 19 No. 4, pp. 390-406. Schmenner, R. (1986), “How can service businesses survive and prosper?”, Sloan Management Review, Vol. 27 No. 3, pp. 21-32. Steven, A.B., Dong, Y. and Corsi, T. (2014), “Global sourcing and quality recalls: an empirical study of outsourcing-supplier concentration-product recalls linkages”, Journal of Operations Management, Vol. 32 No. 5, pp. 241-253. Strauss, A. and Corbin, J. (1998), Basics of Qualitative Research: Techniques and Procedures for Developing Grounded Theory, 2nd ed., Sage, Thousand Oaks, CA. Stringfellow, A., Teagarden, M.B. and Nie, W. (2008), “Invisible costs in offshoring services work”, Journal of Operations Management, Vol. 26 No. 2, pp. 164-179. Tas, J. and Sunder, S. (2004), “Financial services business process outsourcing”, Communications of the ACM, Vol. 47 No. 5, pp. 50-52. Williamson, O.E. (1975), Markets and Hierarchies, Free Press, New York, NY. Williamson, O.E. (1985), The Economic Institutions of Capitalism: Firms, Markets and Relational Contracting, Free Press, New York, NY. Wuyts, S., Rindfleisch, A. and Citrin, A. (2015), “Outsourcing customer support: the role of provider customer focus”, Journal of Operations Management, Vol. 35 No. 1, pp. 40-55. Yin, R. (2009), Case Study Research Design and Methods, 4th ed., Sage. Youngdahl, W. and Ramaswamy, K. (2008), “Offshoring knowledge and service work: a conceptual model and research agenda”, Journal of Operations Management, Vol. 26 No. 2, pp. 212-221. Youngdahl, W.E., Ramaswamy, K. and Dash, K.C. (2010), “Service offshoring: the evolution of offshore operations”, International Journal of Operations & Production Management, Vol. 30 No. 8, pp. 798-820. Zander, U. and Kogut, B. (1995), “Knowledge and the speed of the transfer and imitation of organizational capabilities: an empirical test”, Organization Science, Vol. 6 No. 1, pp. 76-92. Zomerdijk, L. and Vries, J. (2007), “Structuring front office and back office work in service delivery systems: an empirical study of three design decisions”, International Journal of Operations & Production Management, Vol. 27 No. 1, pp. 108-131. Further reading Dibbern, J., Goles, T., Hirschheim, R. and Jayatilaka, B. (2004), “Information systems outsourcing: a survey and analysis of the literature”, Data Base for Advanced Information Systems, Vol. 35 No. 4, pp. 6-102. Kogut, B. and Zander, U. (1993), “Knowledge of the firm and the evolutionary theory of the multinational corporation”, Journal of International Business Studies, Vol. 24 No. 4, pp. 625-645. McIvor, R. (2008), “What is the right outsourcing strategy for your process?”, European Management Journal, Vol. 26 No. 1, pp. 24-34. Tanriverdi, H., Konana, P. and Ge, L. (2007), “The choice of sourcing mechanisms for business processes”, Information Systems Research, Vol. 18 No. 3, pp. 280-299.

PY - 2016/9/5

Y1 - 2016/9/5

N2 - Purpose – The aim of this paper is to develop a framework that incorporates both firm- and process-level factors for understanding location distance choice in the business process outsourcing (BPO) decision.Design/methodology/approach – The research involved undertaking in-depth case study analysis of a number of BPO decisions in six German companies, and employing transaction cost economics (TCE) and the resource-based view (RBV) as a theoretical basis.Findings – The findings have shown that existing literature in the operations management (OM) literature does not provide a complete understanding of the complexities of location distance choice in the BPO decision. This decision requires an understanding of a range of factors at both the firm- and process-level. The findings here enhance our understanding of how these factors interact to influence the potential distance options.Practical implications - The findings have shown how organisations can influence the factors that affect the location distance choice including modularising business processes, developing outsourcing capabilities, and supplementing internal skills in areas such as cultural management and performance monitoring.Originality/value – This is one of the first studies in the OM field to analyse how organisations make the decision in relation to local, nearshore, and offshore location distance options. The paper has highlighted the importance of OM concepts such as performance management and continuous improvement to this phenomenon, and the paper has offered a number of important areas for further research.

AB - Purpose – The aim of this paper is to develop a framework that incorporates both firm- and process-level factors for understanding location distance choice in the business process outsourcing (BPO) decision.Design/methodology/approach – The research involved undertaking in-depth case study analysis of a number of BPO decisions in six German companies, and employing transaction cost economics (TCE) and the resource-based view (RBV) as a theoretical basis.Findings – The findings have shown that existing literature in the operations management (OM) literature does not provide a complete understanding of the complexities of location distance choice in the BPO decision. This decision requires an understanding of a range of factors at both the firm- and process-level. The findings here enhance our understanding of how these factors interact to influence the potential distance options.Practical implications - The findings have shown how organisations can influence the factors that affect the location distance choice including modularising business processes, developing outsourcing capabilities, and supplementing internal skills in areas such as cultural management and performance monitoring.Originality/value – This is one of the first studies in the OM field to analyse how organisations make the decision in relation to local, nearshore, and offshore location distance options. The paper has highlighted the importance of OM concepts such as performance management and continuous improvement to this phenomenon, and the paper has offered a number of important areas for further research.

KW - Outsourcing

KW - Case study

KW - Transaction cost economics

KW - Resource-based view

U2 - 10.1108/IJOPM-04-2014-0192

DO - 10.1108/IJOPM-04-2014-0192

M3 - Article

VL - 36

SP - 1037

EP - 1064

IS - 9

ER -