Outsourcing of knowledge processes: a literature review

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<ul><li><p>Journal of Knowledge ManagementOutsourcing of knowledge processes: a literature reviewIngi Runar Edvardsson Susanne Durst</p><p>Article information:To cite this document:Ingi Runar Edvardsson Susanne Durst , (2014),"Outsourcing of knowledge processes: a literature review", Journal ofKnowledge Management, Vol. 18 Iss 4 pp. 795 - 811Permanent link to this document:http://dx.doi.org/10.1108/JKM-01-2014-0033</p><p>Downloaded on: 02 December 2014, At: 11:53 (PT)References: this document contains references to 58 other documents.To copy this document: permissions@emeraldinsight.comThe fulltext of this document has been downloaded 511 times since 2014*</p><p>Users who downloaded this article also downloaded:Evgenia Vassilakaki, Emmanouel Garoufallou, (2014),"The impact of Facebook on libraries and librarians: a review of theliterature", Program, Vol. 48 Iss 3 pp. 226-245Leif Jarle Gressgrd, Oscar Amundsen, Tone Merethe Aasen, Kre Hansen, (2014),"Use of information and communicationtechnology to support employee-driven innovation in organizations: a knowledge management perspective", Journal ofKnowledge Management, Vol. 18 Iss 4 pp. 633-650 http://dx.doi.org/10.1108/JKM-01-2014-0013Ram Manohar Singh, Meenakshi Gupta, (2014),"Knowledge management in teams: empirical integration and developmentof a scale", Journal of Knowledge Management, Vol. 18 Iss 4 pp. 777-794 http://dx.doi.org/10.1108/JKM-11-2013-0450</p><p>Access to this document was granted through an Emerald subscription provided by 100807 []</p><p>For AuthorsIf you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors serviceinformation about how to choose which publication to write for and submission guidelines are available for all. Please visitwww.emeraldinsight.com/authors for more information.</p><p>About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio ofmore than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of onlineproducts and additional customer resources and services.</p><p>Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on PublicationEthics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation.</p><p>*Related content and download information correct at time of download.</p><p>Dow</p><p>nloa</p><p>ded </p><p>by R</p><p>yers</p><p>on U</p><p>nive</p><p>rsity</p><p> At 1</p><p>1:53</p><p> 02 </p><p>Dec</p><p>embe</p><p>r 20</p><p>14 (</p><p>PT)</p><p>http://dx.doi.org/10.1108/JKM-01-2014-0033</p></li><li><p>Outsourcing of knowledge processes:a literature review</p><p>Ingi Runar Edvardsson and Susanne Durst</p><p>Ingi Runar Edvardsson isa Professor and is basedat School of Business,University of Iceland,Reykjavik, Iceland.Susanne Durst is anAssistant Professor and isbased at School ofBusiness, University ofSkvde, Skvde, Sweden.</p><p>AbstractPurpose This paper aims to review research on outsourcing of knowledge processes to establish thecurrent body of knowledge and, on this basis, to identify gaps in our understanding. This action willjustify further research activities and clarify where no future research is currently needed.Design/methodology/approach The study consists of a systematic review of 24 refereed empiricalarticles on outsourcing of knowledge processes.Findings Five themes were identified: outsourcing of knowledge processes, outsourcing andcollaborative agreements between knowledge-based firms, factors affecting successful knowledgeoutsourcing, knowledge management and knowledge outsourcing and other outsourcing issues. Thereseems to be a lack of understanding concerning knowledge process outsourcing.Research limitations/implications This study may not have enabled a complete coverage of allempirical articles in the field of knowledge process outsourcing. Yet, it seems reasonable to assume thatthe review process covered a large share of studies available.Originality/value To the best of the authors knowledge, no systematic literature review on this topichas previously been published in academic journals.</p><p>Keywords Knowledge management, Outsourcing, Literature review, Knowledge processes,Knowledge-based firms</p><p>Paper type Literature review</p><p>Introduction and background</p><p>Among the most extensive business trends in recent years is outsourcing (Kakabadse andKakabadse, 2002). Outsourcing has been defined as transferring a business activity orfunction from a company to an external contractor who takes control of the activitys inputsand then performs that function, selling it back to the company (Tadelis, 2007).</p><p>Originally, cost reduction, such as labour cost, transport and other cost, was one of themost cited rationales for outsourcing, particularly in manufacturing. More prominentstrategic reasons have recently characterised outsourcing, including focusing on corecompetencies; gaining access to unique resources, skills and talents and capabilitiespossessed by other firms, such as the latest technology and infrastructure; this has beenparticularly true of service firms (Di Gregorio et al., 2009; Kremic et al., 2006; Quinn, 1999;Vietor and Veytsman, 2005). Earlier studies have suggested that the less complex and themore structured the business function is, the more often it is a candidate for outsourcing.Similarly, functions involving less asset specificity and impacting fewer employees couldwell be regarded as prime choices for outsourcing (Kremic et al., 2006). Quinn (1999)suggests that functions carrying low strategic risks and low potential for a competitiveadvantage should be considered for outsourcing. In most cases, standardised processeshave been outsourced. It is, therefore, an interesting question why organisations decide tooutsource high-end processes that are important in their value creation. Such processesare termed knowledge processes and require competitive knowledge, analytical thinkingand judgement and highly specialised skills (Lacity and Willcocks, 2013). Examples of</p><p>Received 30 January 2014Revised 8 May 201412 May 2014Accepted 17 May 2014</p><p>DOI 10.1108/JKM-01-2014-0033 VOL. 18 NO. 4 2014, pp. 795-811, Emerald Group Publishing Limited, ISSN 1367-3270 JOURNAL OF KNOWLEDGE MANAGEMENT PAGE 795</p><p>Dow</p><p>nloa</p><p>ded </p><p>by R</p><p>yers</p><p>on U</p><p>nive</p><p>rsity</p><p> At 1</p><p>1:53</p><p> 02 </p><p>Dec</p><p>embe</p><p>r 20</p><p>14 (</p><p>PT)</p><p>http://dx.doi.org/10.1108/JKM-01-2014-0033</p></li><li><p>such processes are animation, medical processes, research and development (R&amp;D),engineering, technical services, market research, legal processes, financial planning andrisk management (Lacity and Willcocks, 2013). Knowledge process outsourcing (KPO)thus refers to the practice of outsourcing such aspects. It was pointed out that more andmore organisations choose to outsource product developmental functions, such asengineering and R&amp;D and product design. They argue that the strategy behind thisdevelopment is to gain access to pools of highly talented people around the world. This isrelated to a growing shortage of highly educated individuals in the home country, such asengineers, and the rise of science and engineering clusters in emerging economies.Advances in information and communication (ICT) technologies have made this possible(Bhalla and Terjesen, 2013).</p><p>The developments outlined above may eventually have various effects on companies. First,Currie et al. (2008, p. 96) argue that:</p><p>[. . .] most knowledge of the type that gives competitive advantage to firms is not explicit, buttacit, since it resides in the minds of individuals, and is gained through the acquisition of skilland experience. It is this type of knowledge that is usually associated with the core capabilitiesof organisations.</p><p>What does this mean for the core competencies of the firms involved? Can outsourcinghigh-end processes contribute to their competitive advantage or does it weaken their corecompetencies?</p><p>Second, unlike traditional knowledge management (KM), knowledge outsourcing is basedon external experts that generate knowledge-intensive assets which are subsequentlyinternalised by the organisation (Lam and Chua, 2009). This means a change in the valuechain, where parts of the in-house transformation of products and services are transferredto other firms, thus altering the KM process. Knowledge creation and innovation (to identifyand capture) is likely to be most affected, as well as knowledge conversion, which involvesmeasures concerning the storage, filtering and correction of knowledge. The classificationof knowledge into tacit and explicit knowledge (Polanyi, 2009) may be helpful in the contextof knowledge transfer, as the specific nature of the two types of knowledge is likely toimpact the success of the transfer process. Advanced ICT technologies have beenconsidered to be at the centre of knowledge codification. Such technology facilitates KM,especially in large, geographically dispersed organisations. This may work best for explicitknowledge, however, as, given the specific nature of tacit knowledge, it can only betransferred by personal communication (Gorman, 2002) which particularly applies tocomplex technology exchange. Former research has shown (Wang and Noe, 2010) that anumber of factors affect knowledge sharing within and between organisations. Theseinclude organisational context (management support, rewards, structure, organisationalculture and climate where trust is of particular importance); interpersonal and teamcharacteristics; and motivational factors, such as beliefs of knowledge ownership, justiceand perceived benefits and costs. So how does outsourcing of knowledge processes affectthe transfer and implementation of innovation developed by outside organisations?</p><p>Third, knowledge-based firms provide services to customers or other firms. In most cases,they produce an intangible output rather than a tangible product. Another characteristic ofsuch services (as well as services in general) is that consumption and production oftenhappen simultaneously, and the customer is highly involved in the production of services,which is not the case with physical goods. Finally, services tend to be more labour andknowledge intensive than goods (Daft, 2007; Targowski, 2009). All these aspects, and, inparticular, the different involvement of the customer, are highly relevant to the motives andrealisation of outsourcing in service firms. In some services, for instance, the co-location ofcustomers and service providers is quite important; the outsourcing potential is, therefore,limited (Bettencourt et al., 2002; Murray et al., 2009). Knowledge staffs apply theoreticaland analytical knowledge to their jobs, and in many cases, they use non-routine tacitknowledge and are involved in innovation and customisation (Muller and Doloreux, 2009;</p><p>PAGE 796 JOURNAL OF KNOWLEDGE MANAGEMENT VOL. 18 NO. 4 2014</p><p>Dow</p><p>nloa</p><p>ded </p><p>by R</p><p>yers</p><p>on U</p><p>nive</p><p>rsity</p><p> At 1</p><p>1:53</p><p> 02 </p><p>Dec</p><p>embe</p><p>r 20</p><p>14 (</p><p>PT)</p></li><li><p>Murray et al., 2009). Consequently, how does outsourcing affect these processes when, forinstance, product development is transferred to another company?</p><p>Fourth, outsourcing can act as a role model for organisational learning. An example is theoutsourcing of information technology (IT) to an outside vendor. In such a situation, a greatdeal of tacit knowledge has to be converted into explicit knowledge to transfer the businessspecificity to the vendor. In the process, new rules, routines and procedures are developedto manage the outsourced IT activity. In time, these rules and routines will be internalised(Yakhlef, 2009). Another example is a firms ability to learn and use external knowledge(innovation from suppliers) to improve the cost structure, quality and timeliness of theirproducts and services (Azadegan et al., 2008).</p><p>Given that outsourcing of knowledge processes is of recent origin, general understandingis rather limited regarding the drivers and outcomes of such developments. Having this inmind, the aim of this paper is to review research on outsourcing of knowledge processesto establish the current body of knowledge and, on this basis, to identify gaps in currentunderstanding. The following research questions were formulated in accordance with theaim of the paper:</p><p>RQ1. Which were the main findings of the studies?</p><p>RQ2. What types of knowledge processes have been outsourced?</p><p>RQ3. How does outsourcing affect core competences of organisations?</p><p>RQ4. What contributes to success in outsourcing of knowledge processes?</p><p>The remaining paper is organised as follows. In the next section, the method used is brieflydiscussed. This is followed by a presentation of the results. The paper ends with theconclusion and implications of the study.</p><p>Methodology of literature review</p><p>In the review process, the authors adopted the principles of a systematic review asrecommended by Jesson et al. (2011), namely:</p><p> mapping the field through a scoping review;</p><p> comprehensive search;</p><p> quality assessment;</p><p> data extraction;</p><p> synthesis; and</p><p> write-up.</p><p>First, the authors developed a research plan comprising the research questions they wereinterested in answering. This also involved the keywords, and a set of inclusion andexclusion criteria. The authors were interested in the current status of research onoutsourcing of knowledge processes to identify promising areas for future research. Thequestions formulated, as outlined above, were:</p><p>RQ1. Which were the main findings of the studies?</p><p>RQ2. What types of knowledge processes have been outsourced?</p><p>RQ3. How does outsourcing affect core competences of organisations?</p><p>RQ4. What contributes to success in outsourcing of knowledge processes?</p><p>It was decided to use multiple keywords to identify relevant studies, such as outsourcing,offshoring, knowledge competence, knowledge-intensive firms/companies andknowledge-based service. The inclusion criteria were empirical research papers,peer-reviewed, English language, ProQuest and Web of Science databases. Grey literature</p><p>VOL. 18 NO. 4 2014 JOURNAL OF KNOWLEDGE MANAGEMENT PAGE 797</p><p>Dow</p><p>nloa</p><p>ded </p><p>by R</p><p>yers</p><p>on U</p><p>nive</p><p>rsity</p><p> At 1</p><p>1:53</p><p> 02 </p><p>Dec</p><p>embe</p><p>r 20</p><p>14 (</p><p>PT)</p></li><li><p>such as reports and non-academic research was excluded, as well as languages otherthan English and databases other than ProQuest and Web of Science.</p><p>Additionally, the authors produced an Excel data sheet consisting of key aspects related tothe research aim. In this case these were: name(s) of author(s), year of publication,research aim/objectives, theoretical perspective/framework, method, main findings andname of the journal.</p><p>Second, once the authors had specified all the relevant issues, one of the authorsaccessed ProQuest and Web of Science and searched using combinations of thekeywords set. Combinations of these keywords were looked for in the title, keywords andabstract. The literature review included papers published until 28 October 2013.Depending on the combination of keywords used, different numbers of hits weregenerated. For example, the keyword combination outsourcing and knowledgecompetence resulted in 16 hits with ProQuest, the combination outsourcing andkn...</p></li></ul>

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