Resource co-specialization in outsourcing of enterprise systems software: Impact on exchange success and firm growth

Research output: Contribution to journalArticle

Abstract

Purpose: Enterprise systems are commonly implemented by firms through outsourcing arrangements with software vendors. However, deriving benefits from these implementations has proved to be a challenge, and a great deal of variation has been observed in the extent of value generated for client and vendor firms. This research examines the role of co-specialization as a strategy to make the most out of outsourced enterprise systems. The authors develop hypotheses relating resource co-specialization with two indicators of success for implementation of enterprise software: (1) exchange success and (2) firm growth. Design/methodology/approach: The hypotheses are tested using a unique panel data set of 175 firms adopting Advanced Planning and Scheduling (APS) software, a type of enterprise system used for managing manufacturing and logistics. The authors identify organizational factors that support co-specialization and then examine how co-specialization is associated with enterprise software implementation success, controlling for the endogenous choice to co-specialize. Findings: The empirical results suggest that resource co-specialization is positively associated with implementation success and that the two resource co-specialization pathways that are examined complement each other in providing performance benefits. Originality/value: This paper contributes to the research literature on outsourcing. The study also provides a new empirical test using a unique data set of 175 firms adopting APS Software.

Original languageEnglish (US)
Pages (from-to)1015-1046
Number of pages32
JournalJournal of Science and Technology Policy Management
Volume10
Issue number5
DOIs
StatePublished - Nov 20 2019

Fingerprint

Outsourcing
Enterprise software
Scheduling
Planning
Industry
Logistics
Systems software
Enterprise systems
Firm growth
Resources
Software

Keywords

  • Advance planning and scheduling (APS)
  • Enterprise systems
  • Exchange success
  • Firm growth
  • Resource co-specialization
  • Strategic commitment

ASJC Scopus subject areas

  • Industrial relations
  • Strategy and Management
  • Management Science and Operations Research
  • Management of Technology and Innovation

Cite this

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abstract = "Purpose: Enterprise systems are commonly implemented by firms through outsourcing arrangements with software vendors. However, deriving benefits from these implementations has proved to be a challenge, and a great deal of variation has been observed in the extent of value generated for client and vendor firms. This research examines the role of co-specialization as a strategy to make the most out of outsourced enterprise systems. The authors develop hypotheses relating resource co-specialization with two indicators of success for implementation of enterprise software: (1) exchange success and (2) firm growth. Design/methodology/approach: The hypotheses are tested using a unique panel data set of 175 firms adopting Advanced Planning and Scheduling (APS) software, a type of enterprise system used for managing manufacturing and logistics. The authors identify organizational factors that support co-specialization and then examine how co-specialization is associated with enterprise software implementation success, controlling for the endogenous choice to co-specialize. Findings: The empirical results suggest that resource co-specialization is positively associated with implementation success and that the two resource co-specialization pathways that are examined complement each other in providing performance benefits. Originality/value: This paper contributes to the research literature on outsourcing. The study also provides a new empirical test using a unique data set of 175 firms adopting APS Software.",
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