Outsourcing Investment Research Articles

R&D subsidies, tax reductions and innovation outsourcing of enterprises

As an important part of the innovation behavior of enterprises, innovation outsourcing is characterized by high technology, high threshold, and industry–university–research integration. Its status in the process of China's scientific and technological development has been continuously improved and it has received increasing attention and support through the government's innovation policies. This paper systematically tests the impact of research and development (R&D) subsidies and tax reductions on enterprises' innovation outsourcing. The results show that R&D subsidies and tax reductions can significantly increase enterprises' total amount and share of innovation outsourcing investment. An internal mechanism test shows that R&D subsidies can promote enterprises' innovation outsourcing by improving the adequacy of R&D funds and the quality of R&D staff. In addition, compared to the eastern region and non-state-owned enterprises, government subsidies have a more significant driving effect on innovation outsourcing in the central and western regions and for state-owned enterprises. The conclusions drawn in this paper provide an important empirical basis and policy reference for Chinese enterprises' internal and external innovation behaviors in the context of government innovation policies.

Management of the Pension Fund in Korea: Sharpe Ratio as a Measurement

Purpose: This study criticizes the existing benchmarks of the national equity fund specified by the National Pension Service and proposes alternative benchmarks.
 Design/methodology/approach: First, this study investigates whether the existing benchmarks returns are affected by the value and momentum factors. Second, we examine the effects of different factors on the benchmark returns of internal and outsourcing investments. Third, we propose three benchmarks by including the value factor and/or momentum factor. Finally, the Sharpe ratios of return-to-risk are used to measure these proposed benchmarks compared to the existing benchmarks.
 Findings: First, the existing benchmarks of internal and outsourcing investments are associated with value and momentum factors, which have been observed in many other countries. Second, the Sharpe ratios of the three proposed benchmarks - value oriented, momentum oriented, and value & momentum oriented - are always better than the existing benchmarks. Third, the Sharpe ratio of the value oriented benchmark is better than that of the momentum oriented and value & momentum oriented benchmarks. Finally, the Sharpe ratios are better with increased investment weights of value and/or momentum.
 Research limitations/implications: This study uses the Sharpe ratio to measure the return-to-risk relationship. There could be other measures to capture the relationship.
 Originality/value: This is the first research to analyze the national pension equity fund with proposed benchmarks in the Korean market.

On the attractiveness of the UK for outsourcing services

Purpose – Outsourcing is in a new era: an era of value-adding services, innovation and transformation. An era that shifts competition to skills and expertise where the main focus of key players in the industry is on the strategic impact of outsourcing services. As the outsourcing landscape is changing, so competition between countries for outsourcing work is reconstructing. It is no longer competition for low costs, but a search for superior skills, both technical and managerial, that provides the strategic guidance and operational excellence needed in the twenty-first century. While the professional and academic literature has extensively studied the comparative advantage of low-cost locations such as India, we know very little about the attractiveness of Western countries, such as the UK, for outsourcing services. To contribute to this end, the purpose of this paper is to examine the UK attractiveness in light of three key trends in the outsourcing industry: the maturity of the outsourcing industry drives more client firms to seek impact on business and strategic performance from their vendors; client firms and vendors deploy complex sourcing models that increase the importance of sourcing managerial capabilities, such as relationship management, vis-à-vis technical and delivery capabilities; locations with promising entry points to lucrative markets are becoming attractive for outsourcing investments as part of the firm's growth strategy. Design/methodology/approach – The empirical base of this study is based on a comparative analysis of eight European destinations (UK, Germany, France, The Netherlands, Spain, Ireland, Czech Republic and Poland) to conclude that the UK, as a talent-base, value-adding country that also offers advanced sourcing capabilities, has positioned its economy to attract investments from both outsourcing vendors and client firms. While the authors acknowledge the relative high-cost base of the UK economy, they assert that the high service standards, access to skills, entry point to mainland Europe and the USA, government support and supportive infrastructure are superior value propositions offered by the UK in the context of outsourcing services. Findings – The findings of this study highlight the contribution of Western economies to outsourcing and their fairly strong comparative position to specific line of services such as contact centers, research and development and specific business process outsourcing services. Research limitations/implications – The main limitation of this study is the use of a country attractiveness framework which has been mainly used for low-cost countries. The authors therefore acknowledge the need to develop a country attractiveness framework which is suitable for Western countries. Practical implications – This study offers decision makers an extensive tool to assess their outsourcing investments by considering both low-cost and Western countries based on the value expected from each investment. Originality/value – This is the first study on the attractiveness of a Western country, such as the UK, which the authors defined as a talent-based, value-adding and advanced sourcing (TAVAAS) country. Through the examination of its comparative attractiveness the authors highlight the potential of the UK and many other Western countries such as USA, Germany or Canada to attract outsourcing investments.

How a Firm’s Competitive Environment and Digital Strategic Posture Influence Digital Business Strategy

In this paper, we examine how the competitive industry environment shapes the way that digital strategic posture (defined as a focal firm's degree of engagement in a particular class of digital business practices relative to the industry norm) influences firms' realized digital business strategy. We focus on two forms of digital strategy: general IT investment and IT outsourcing investment. Drawing from prior literature on determinants of IT activity and competitive dynamics, we argue that three elements of the industry environment determine whether digital strategic posture has an increasingly convergent or divergent influence on digital business strategy. By divergent influence, we mean an influence that leads to spending substantially more or less on a particular strategic activity than industry norms. We predict that a digital strategic posture (difference from the industry mean) has an increasingly divergent effect on digital business strategy under higher industry turbulence, while having an increasingly convergent effect on digital business strategy under higher industry concentration and higher industry growth. The study uses archival data for 400 U.S.-based firms from 1999 to 2006. Our findings imply that digital business strategy is not solely a matter of optimizing firm operations internally or of responding to one or two focal competitors, but also arises strikingly from awareness and responsiveness to the digital business competitive environment. Collectively, the findings provide insights on how strategic posture and industry environment influence firms' digital business strategy.

Strategic outsourcing investment in high technology industry

In a highly competitive industry, especially high-tech industry, a firm needs to have appropriate outsourcing strategies in order to survive. However, a firm used to have a strategic dilemma between supplier-oriented strategy and production-oriented strategy. Because of increasing complexity in the socio-economic surroundings along with rapidly changing technologies, how to have a suitable outsourcing investment is becoming an important focus for companies. However, there is no such a research in previous literatures. In order to fill the vacancy, the paper tries to briefly discuss the mechanisms of strategic outsourcing investment, its critical success criteria, and then introduce different evaluation models to help in having suitable outsourcing investment. Finally, the paper finds that an analytic network process (ANP) associated with benefits, opportunities, costs and risks (BOCR), is optimal to help companies to select the most suitable outsourcing investment projects. Key words: Analytic Network Process (ANP), Benefits, Opportunities, Costs and Risks (BOCR), strategic outsourcing investment.

Outsourcing timing, contract selection, and negotiation

This paper examines outsourcing contracts subject to irreversible outsourcing investment and cost uncertainty. We consider three common outsourcing contracts (fixed-price, cost-plus, and gain-sharing) and address issues of when to outsource and which contracts to select. Motivated by both practical importance and lack of academic research in this area, this paper compares and analyses these contracts’ utilities and outsourcing options’ values and assists managers in timing of outsourcing and selection and negotiation of outsourcing contracts.

Short-Termism as a Rule : the Effects of Portfolio Management Delegation

Because of their governance, investors are not able to develop long-term investment policies. While they have been outsourcing investment decision making to asset management firms and evaluation to intermediaries (consulting firms and credit raring agencies), they have contributed to the creation of markets of providers which are dominated by the logic of short-term profit. The dictates of performances comparison and competition have fostered evaluation of providers through synthetic indexes. These provide an abstract representation of economic activity that hinders alternative representations, specific to long-term investors. These various practises have been institutionalized into legitimate norms hard to be challenged. JEL Classification : G20, G23, G24, L14, L22