Affiliation:
1. University of Iceland, Iceland
2. Department of Business Administration, Tallinn University of Technology, Estonia
Abstract
This chapter consists of a review of 42 refereed articles on outsourcing in relation to knowledge management and learning. Among the knowledge and learning potentials of outsourcing in organisations are to focus on core competencies, organisational learning, shorten production cycles, improve quality, and enhance innovation. Outsourcing can also have negative outcomes, such as knowledge loss, competences drainage, organisational learning problems, diminished trust, poorer services, hidden cost, and reduction in innovation. The findings of the review were summarised in a number of hypotheses and two conceptual models that highlight the contribution of outsourcing to either competitive advantage or disadvantage. The chapter can assist managers to seek competitive advantages out of outsourcing of activities while avoiding detrimental outsourcing effects.