Value co‐creation and resource based perspectives for strategic sourcing

Abstract

PurposeThe purpose of this paper is to develop and illustrate a theoretically grounded framework capable of strategic guidance in making sourcing decisions.Design/methodology/approachBased on literature review and secondary data from the US operation of 7‐Eleven, a large international retailer, this study develops and supports a framework for understanding and undertaking business process sourcing decisions. The framework considers internal core competencies, as well as the role of external actors in value creation, in analyzing sourcing decisions for business processes.FindingsCase analysis reveals that a firm's successful sourcing decisions can be explained by resource based view (RBV) and value co‐creation theories. RBV is shown to provide an internal view of the firm considering its core competencies, while value co‐creation illuminates the external perspective considering the role of customers when making sourcing decisions. Further, these theories can be decomposed and simplified, thereby providing scholars with new theoretical insights for this phenomenon and practitioners with a decision‐making tool for undertaking sourcing decisions.Originality/valueThis paper explains in granular detail how effective outsourcing decisions can be made. It employs a rarely considered perspective by combining nascent literature from the value co‐creation stream with established beliefs about RBV core competencies to make three contributions. First, it shows how sourcing decisions can be explained not only by the RBV perspective but also by the value co‐creation view. Second, in considering the role of value co‐creation with the customer, it introduces the perspective of the customer as a decision‐making consideration for sourcing. Third, it provides practitioners with a sourcing decision‐making tool.