Outsourcing as a mode of organizational learning

Abstract

PurposeThe purpose of this paper is to explore the extent to which outsourcing can be regarded as a mode of increasing organization learning through the internalization of new routines.Design/methodology/approachThe paper features six case studies of firms that have outsourced parts, or all of their information technology (IT) activities.FindingsWhen a firm outsources an IT activity (that has been performed in‐house), it needs to develop an ability to specify to its supplier(s), and articulate its IT requirements in explicit terms. Firm's effort to externalize knowledge that was internal to an external supplier implies that a great deal of relatively tacit knowledge has to be converted into explicit knowledge, so that suppliers are able to understand the firm's business specificity. In this very process of externalizing knowledge and interacting with suppliers and other market players, the firm develops new rules, routines and procedures relating to how to manage the outsourced IT activity, which over time will be internalized.Originality/valueThe paper is of value in linking outsourcing and organizational learning.