The organizational changes leading to "make and buy" decisions and their effects on outsourcing control. The case of STMicroelectronics

Journal title MANAGEMENT CONTROL
Author/s Antonio Leotta
Publishing Year 2015 Issue 2014/3
Language Italian Pages 28 P. 59-86 File size 174 KB
DOI 10.3280/MACO2014-003004
DOI is like a bar code for intellectual property: to have more infomation click here

Below, you can see the article first page

If you want to buy this article in PDF format, you can do it, following the instructions to buy download credits

Article preview

FrancoAngeli is member of Publishers International Linking Association, Inc (PILA), a not-for-profit association which run the CrossRef service enabling links to and from online scholarly content.

Although make or buy decisions are still studied as choices between alternative options, hybrid organizational forms, resulting from make and buy decisions, are quite widespread. Such settings may derive from outsourcing processes which, due to various constraints, can remain uncompleted. From the perspective of a single decision-maker, a partial outsourcing may be due to organizational resistances, especially from the entities that should be outsourced. In many circumstances, however, even though these resistances seem to constrain the outsourcing choices, they can allow appropriate organizational solutions, as in the case of outsourcing control, which can take advantage from make and buy decisions. The paper examines how a partial outsourcing process impacts on the configuration of outsourcing control and its effectiveness. After a critical review of various theoretical perspectives, the actor-network view is proposed as the most appropriate approach to study the phenomenon. A single case study is then carried out to show how the viewpoints of various organizational units allow the assessment of a hybrid organization where internal units allows an effective outsourcing control.

Keywords: Outsourcing, control, actor network organizational resistance

  1. Amit R., Schoemaker P. (1993), Strategic Assets and Organizational Rent, Strategic Management Journal, 14, pp. 33-46. DOI: 10.1002/smj.4250140105
  2. Andriessen D. (2004), Making sense of Intellectual Capital. Design a method for the valuation of Intangibles, USA, Burlington, Elsevier Butterworth-Heinemnn.
  3. Barlas Y. (1996), Formal aspects of model validity and validation in system dynamic, System Dynamics Review, 12, 3. DOI: 10.1002/(SICI)1099-1727(199623)12:3<183::AIDSDR103>3.3.CO;2-W
  4. Barney J.B. (1991), Firm resources and sustained competitive advantage, Journal of Management, 17, pp. 99-120. DOI: 10.1177/014920639101700108
  5. Bianchi C. (2012), Enhancing Performance Management and Sustainable Organizational Growth through System Dynamics Modeling, in Groesser S.N., Zeier R. (Eds.), Systemic Management for Intelligent Organizations: Concepts, Model-Based Approaches, and Applications, Heidelberg, Springer-Publishing. DOI: 10.1007/978-3-642-29244-6_8
  6. Bianchi C. and Bivona E. (2005), Using System Dynamics ILEs to enhance Intellectual Capital policies in service businesses, Paper presented at the annual International System Dynamics Conference, Boston.
  7. Bivona E. (2008), Exploring Intellectual Capital in a call centre through a ‘System Dynamics’ resource based view, Portuguese Journal of Management Studies, XIII, 3, pp. 361-384.
  8. Bontis N. (2001), Assessing knowledge assets: a review of the models used to measure intellectual capital, International Journal of Management Reviews, 3(1), pp. 41-60. DOI: 10.1111/1468-2370.00053
  9. Brooking A. (1996), Intellectual Capital, London, International Thompson Business Press.
  10. Choo C. and Bontis N. (2002), The Strategic Management of Intellectual Capital and Organizational Knowledge, New York, Oxford University Press.
  11. Dierickx I., Cool K. (1989), Asset Stock Accumulation and Sustainability of Competitive Advantage, Management Science, 35(12), pp. 1504-1511. DOI: 10.1287/mnsc.35.12.1504
  12. DMSTI (2003), Intellectual Capital Statements – The New Guideline, Danish Ministry of Science, Copenhagen, Technology and Innovation.
  13. Dumay J.C. (2009), Intellectual capital measurement: a critical approach, Journal of Intellectual Capital, 10(2), pp. 190-210. DOI: 10.1108/14691930910952614
  14. Edvinson L., Malone M. (1997), Intellectual Capital, New York, Harper business.
  15. Forrester J.W. (1961), Industrial Dynamics, Productivity Press.
  16. Forrester J.W., Senge P. (1980), Tests for building confidence in System Dynamics Models, TIMS Studies in the Management Sciences, 14, North-Holland Publishing Company
  17. Hafeez K. and Abdelmeguid H. (2003), Dynamics of Human Resource and Knowledge Management, Journal of the Operational Research Society, 54, pp. 153-164. DOI: 10.1057/palgrave.jors.2601513
  18. Hamel G. and Prahalad C.K. (1994), Competing for the future, Boston, MA, Harvard Business
  19. School Press. Hsu I.C. and Sabherwal R. (2011), From intellectual capital to firm performance: the mediating role of knowledge management capabilities, IEEE Transactions on Engineering Management, 58(4), pp. 626-642. DOI: 10.1109/TEM.2011.2111455
  20. Kaplan R.S. and Norton D.P. (2001), The Strategy Focused Organization, Boston, Harvard Business School Press.
  21. Kogut B., Zander U. (1992), Knowledge of the firm, combinative capabilities, and the replication of technology, Organization Science. 3(3), pp. 383-397. DOI: 10.1287/orsc.3.3.383
  22. Lev. B. (2001), Intangibles: Management, Measurement, and Reporting, Washington D.C.
  23. Lönnqvist A., Sillanpää V., Carlucci D. (2009), Intellectual Capital Management in Practice: Assessment of Implementation and Outcomes, Knowledge Management Research and Practice, 7, 4, pp. 308-316. DOI: 10.1057/kmrp.2009.22
  24. Marr B. (2005) (ed.), Perspectives on intellectual capital. Multidisciplinary insights into management, measurement, and reporting, Oxford, Elsevier Butherworth-Heinemann, Burlington.
  25. Marr B., Schiuma G., Neely A. (2004), The Dynamics of Value Creation: Mapping your Intellectual Performance Drivers, Journal of Intellectual Capital, 5, 2, pp. 312-325. DOI: 10.1108/14691930410533722
  26. Menor L.J., Kristal M.M. and Rosenzweig E.D. (2007), Examining the influence of operational intellectual capital on capabilities and performance, Manufacturing and Service Operations Management, 9(4), pp. 559-578. DOI: 10.1287/msom.1060.0131
  27. Morecroft J.D.W. (1997), The Rise and Fall of People Express: A Dynamic Resource-Based View, Proceedings of the 1997 International System Dynamics Conference, Barlas Y., Diker V., Polat S. (eds.). Istanbul, pp. 579-586.
  28. Morecroft J.D.W. (2002), Resource Management under Dynamic Complexity, in Morecroft, Sanchez and Heene (eds), Systems Perspectives on Resources, Capabilities and Management Processes, Advanced Series in Management, Oxford, Elsevier Pergamon.
  29. Morecroft, J.D.W. (2007), Strategic Modelling and Business Dynamics, Chichester, Wiley.
  30. Nørreklit H. (2000), The Balanced Scorecard – a critical analysis of some of its assumptions, Management Accounting Research, 11, pp. 65-88. DOI: 10.1006/mare.1999.0121
  31. Abernethy M. A., Chua W. F. (1996), A field study of control system ‘‘redesign’’: the impact of institutional processes on strategic choice, Contemporary Accounting Research, 13, pp. 596-606. DOI: 10.1111/j.1911-3846.1996.tb00515.x
  32. Adelman M. A. (1949), The large firm and its suppliers, Review of Economics and Statistics 31, pp. 113-118.
  33. Czarmiawska B. (2004), Narratives in social science research, London, Sage.
  34. Barney J. B. (1986). Strategic factor markets: expectations, luck, and business strategy, Management Science 32, pp. 1231-1241.
  35. Berger P., Luckmann T. (1969), The Social Construction of Reality, Harmondsworth, Penguin.
  36. Bradach J., Eccles R. (1989), Rice, authority, and trust: From ideal types to plural forms, Annual Review of Sociology, 15, pp. 97-118.
  37. Briers M., Chua W. F. (2001), The role of actor-networks and boundary objects in management accounting change: a field study of implementation of activity-based costing”, Accounting, Organizations and Society, 26, 3, pp. 237-69. DOI: 10.1016/S0361-3682(00)00029-5
  38. Brunetti G. (1979), Il controllo di gestione in condizioni ambientali perturbate, Milano, FrancoAngeli.
  39. Burns J., Scapens R. W. (2000), Conceptualising management accounting change: an institutional framework, Management Accounting Research, 11, 1, pp. 3-25. DOI: 10.1006/mare.1999.0119
  40. Càker M. (2008), Interwined coordination mechanisms in inter-organizational relationships with dominated suppliers, Management Accounting Research, 19, pp. 231-251. DOI: 10.1016/j.mar.2008.06.003
  41. Calon M. (1986), Some Elements of a Sociology of Translation: Domestication of the Scallops and the Fishermen of St Brieuc Bay, in Law J., editor, Power, Action and Belief: A New Sociology of Knowledge, London, Routledge & Kegan Paul.
  42. Callon M. (2007), What does it mean to say that economics is performative?, in MacKenzie D., Muniesa F., and Siu L., editors. Do Economists Make Markets? On the Performativity of Economics, Princeton, NJ, Princeton University Press, 311-357.
  43. Covaleski M. A., Dirsmith M. W., Michelman J. E. (1993), An institutional theory perspective on the DRG framework, case-mix accounting systems and health-care organizations, Accounting Organisations and Society, 18, 1, pp.65-80.
  44. Pasher E., Ronen T. (2011), The complete guide to Knowledge Management. A strategic plan to leverage your company’s Intellectual Capital, New Jersey, Hoboken, John Wiley & Sons Inc. DOI: 10.1002/9781118983782
  45. Porter M.E. (1985), Competitive Advantage; Creating and Sustaining Superior Performance. New York, The Free Press.
  46. Porter M.E. (1991), Towards a Dynamic Theory of Strategy, Strategic Management Journal, 12, Special Issue: Fundamental Research Issues in Strategy and Economics, Winter, pp. 95-117.
  47. Reed K.K., Lubatkin M. and Srinivasan N. (2006), Proposing and Testing an Intellectual Capital-Based View of the Firm, Journal of Management Studies, 43, pp. 867-893. DOI: 10.1111/j.1467-6486.2006.00614.x
  48. Richardson G.P. and Plug A.L. (1981), Introduction to system dynamics modelling with DYNAMO, Cambridge (MA), MIT Press.
  49. Robson C. (1993), Real World Research: A Resource for Social Scientists and Practitioners-Researchers, Oxford, Blackwell.
  50. Rogers E. M. (1962), Diffusion of Innovations, New York, NeThe Free Press.
  51. Roos G., Pike S., Fernstrom L. (2005), Valuation and reporting of intangibles – state of the art in 2004, Int. J. of Learning and Intellectual Capital, 2, 1, pp.21-48.
  52. 10.1504/IJLIC.2005.006804. Roos J., Roos G., Dragonetti N.C., and Edvinsson L. (1997), Intellectual Capital: Navigating in the New Business Landscape, London, Macmillan.
  53. Simon H.A. (1979), Rational decision making in business organisations, American Economic Review, 69, pp. 493-513.
  54. Sterman J.D. (2000), Business Dynamics - System Thinking and Modeling for a Complex World, Irwin McGraw-Hill.
  55. Stewart T. (1997), Intellectual Capital, New York, Doubleday.
  56. Sveiby K. (1997), The New Organizational Wealth, San Francisco, Berrett-Koehler.
  57. Vennix J. (1996), Group Model Building, Chichester, Wiley.
  58. Warren K. (2002), Competitive Strategy Dynamics, Chichester, John Wiley & Sons.
  59. Warren K. (2005), Improving strategic management with the fundamental principles of system dynamics, System Dynamics Review, 21(4), pp. 329-350. DOI: 10.1002/sdr.325
  60. Warren K. (2008), Strategic Management Dynamics, England, John Wiley & Sons.
  61. Wernerfelt B. (1984), A Resource-based View of the Firm, Strategic Management Journal, 5, pp. 171-180. DOI: 10.1002/smj.4250050207
  62. Winch G. (2001), Management of the “Skills Inventory” in Times of Major Change, System Dynamics Review, 17(2), pp. 151-159. DOI: 10.1002/sdr.208
  63. David R. J., Han S. K. (2004), A systematic assessment of the empirical support for transaction cost economics, Strategic Management Journal, 25(1), pp. 39-58. DOI: 10.1002/smj.359
  64. Di Bernardo A. (1989), La rete del capitalismo flessibile: oltre la dicotomia gerarchiamercato, Economia e Politica Industriale, 64.
  65. Giddens A. (1979), Central problems in social theory, Berkeley, CA, University of California Press.
  66. Giddens A. (1984), The constitution of society, Cambridge, Polity press.
  67. Gulati R, Lawrence P. R., Puranam P. (2005), Adaptation in vertical relationships: beyond incentive conflict, Strategic Management Journal 26(5), pp. 415-440. DOI: 10.1002/smj.458
  68. Hammersley M., Atkinson P. (1995), Ethnography. Principles in practice (2nd edt.). Routledge, London.
  69. Helfat C. E., Eisenhardt K. M. (2004), Inter-temporal economies of scope, organizational modularity, and the dynamics of diversification, Strategic Management Journal, 25(13), pp. 1217-1232. DOI: 10.1002/smj.427
  70. Heriot K. C., Kulkarni S., P. (2001), The Use of Intermediate Sourcing Strategies. Journal of Supply Chain Management, 37, 4, pp. 18-26.
  71. Kurunmäki, L. (2004), A hybrid profession – the acquisition of management accounting expertise by medical professionals, Accounting, Organizations and Society, 29, pp.327-347. DOI: 10.1016/S0361-3682(02)00069-7
  72. Latour B. (1987). Science in Action: How to Follow Scientists and Engineers Through Society, Milton Keynes, Open University Press.
  73. Leotta A., Ruggeri D. (2012), Changes in performance measurement and evaluation systems as institutional processes: the case of an Italian teaching hospital, in Epstein M. J., Manzoni J-F, Davila A., editors, Performance measurement and management control: global issues, Emerald Group Publishing, Ltd.
  74. Lorenzoni G., a cura di (1992), Accordi, reti e vantaggio competitivo, Milano, Etas Libri.
  75. Modell S. (2001), Performance measurement and institutional process: a study of managerial responses to public sector reform, Management Accounting Research, 12, pp. 437-464.
  76. Mouritsen J. (1999), The flexible firm: strategies for a subcontractor’s management control, Accounting, Organizations and Society, 24, 1, pp. 31-55.
  77. Nelson R. R. and Winter S. G., (1982), An Evolutionary Theory of Economic Change, Boston, Harvard University Press.
  78. Parmigiani A. (2007), Why do firms both make and buy? An investigation of concurrent sourcing, Strategic Management Journal, 28, pp. 285-311. Doi. 10.1002/smj.580.
  79. Panzar J.C., Willig R.D. (1981), Economies of scope, American Economic Review, 71, pp. 268-272.
  80. Perry M.K. (1989), Vertical integration: determinants and effects, in Schmalensee R., Willig
  81. R. D., editors, Handbook of Industrial Organization, Vol. 1, Morristown, NJ, Elsevier Science, pp. 185-250.
  82. Pindyck R. S., Rubenfeld D. L. (1995), Microeconomics, Englewood Cliffs, NJ. Barney, Prentice-Hall.
  83. Powell W. W., DiMaggio P. J., eds. (1990), The Neo-institutionalism in organizational analysis, Chicago, The University of Chicago Press.
  84. Prahalad CK, Hamel G. (1990), The core competence of the corporation, Harvard Business Review, 68(3), pp. 79-90.
  85. Quattrone P., Hopper T. (2006), What is IT? SAP, accounting, and visibility in a multina tional organization, Information and Organization, 16, pp. 212-250. DOI: 10.1016/j.infoandorg.2006.06.001
  86. Quattrone P., Hopper T. (2001), What does organizational change mean? Speculations on a taken for granted category, Management Accounting Research, 12, 4, pp. 403-35. DOI: 10.1006/mare.2001.0176
  87. Silverman D. (2001), Interpreting qualitative data. Methods for analysing talk, text and interaction, (2nd edt.), London, Sage,.
  88. Smith J. A., Morris J., Ezzamel M., (2005), Organisational change, outsourcing and the impact on management accounting, Management Accounting Research, 37, pp. 415-444. DOI: 10.1016/i.bar.2005.07.004
  89. Soda G. (1998), Reti tra imprese, Roma, Carocci.
  90. Williamson O. E. (1985), The Economic Institutions of Capitalism: Firms, Markets, Relational Contracting,. New York, Free Press.

  • Inter-firm coordination as an Information problem. The case of a divisionalized company Antonio Leotta, in MANAGEMENT CONTROL 2/2016 pp.167
    DOI: 10.3280/MACO2016-002008
  • Il cambiamento dei sistemi di controllo manageriale e il processo di successione nelle imprese familiari. Quali possibili relazioni? Francesca Maria Cesaroni, Annalisa Sentuti, in MANAGEMENT CONTROL 1/2019 pp.17
    DOI: 10.3280/MACO2019-001002
  • Modello di controllo e misure di performance nelle relazioni di fornitura tra imprese. Una ricerca empirica nel contesto italiano Rosa Alba Miraglia, in MANAGEMENT CONTROL 2/2016 pp.69
    DOI: 10.3280/MACO2016-002004

Antonio Leotta, I processi di cambiamento che portano alle scelte di "make and buy" e gli effetti sul controllo dei sub-fornitori. Il caso STMicroelectronics in "MANAGEMENT CONTROL" 3/2014, pp 59-86, DOI: 10.3280/MACO2014-003004