The Advantages of Outsourcing in Terms of Information Management

Abstract

Subcontracting and, more generally, productive outsourcing increasingly characterise industrial organisation. The aim of this paper is to analyse information management in different cases of supplier networks, in order to provide hypotheses on the advantages of networks over other forms of suppliers' relationships. We review some empirical literature and compare specific cases. First, networks characterised by a large firm and more or less dependent suppliers is examined, in Japan, France and Italy. Second, outsourcing in systems of small firms, where power is more equally distributed along the productive process, is analysed for the same three countries. Finally, we derive theoretical insights by arguing that the study of information flows is key to explain such phenomena. More precisely, the advantages of outsourcing are due both to the particular way various types of information, on technology or on market conditions, are shared in the network and to the governance of the network, that has to be characterised by a more equal distribution of contractual power between suppliers and users.