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Backsourcing intellectual capital: Is the damage already done, or can it be prevented?
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Business Administration.
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Business Administration.
2017 (English)Independent thesis Advanced level (professional degree), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

In a globalized world where competition has risen, it has become more and more popular for companies to outsource non-core activities. The main reasons for doing so are due to cost reductions, improving organizational focus, better flexibility and improve product quality, delivery and service. As outsourcing is increasingly growing in popularity, the problems associated is more prominent. For some companies outsourcing is a bridge to all the related benefits, while for some companies it can be a nightmare. When the expectations aren't met, the focal firm will have to re-evaluate the decision. The decision to will therefore to renegotiate with the vendor, switch to another vendor or to backsource. Backsourcing is when activities which previously has been outsourced is brought back in-house.

Previous research on backsourcing has focused on functions such as information technology and information system. Little attention has been given towards production and the risk involved. In order for the vendor to produce, knowledge need to be shared. This can be complicated for knowledge-intensive firms considering their value creating resource is knowledge which derives from their intellectual capital. As the know-how of the product is shared to the vendor, the research made is transferred.

If the knowledge-intensive firm is dissatisfied with the entered outsourcing agreement, and wishes to end the agreement the know-how will still continue to be shared. Causing the focal firm to feel locked-in with the vendor. If they choose to backsource, the risks related to the shared knowledge appears. As the knowledge is already shared, the question if it can be prevented arises. Which leads to our research questions:

RQ1: What are the risks related to intellectual capital when backsourcing?

RQ2: How can these risks be prevented?

To answer these questions, a case study from a knowledge-intensive firm who faces this problem is examined with our theoretical framework. The risk identified were opportunistic behaviour with the shared intellectual capital, reputational risk, risk with reintegrating intellectual capital, investment risk and risk from earlier contractual arrangement. To prevent these revealed to be difficult but not impossible. To summarize the preventing measure identified, they revolve around legal protection from well-written contracts and patents, careful execution plan, use of external expertise and by avoiding high investment through establishing a pilot plant.

Place, publisher, year, edition, pages
2017. , 80 p.
Keyword [en]
Backsourcing, intellectual capital, outsourcing, knowledge-intensive firm
National Category
Business Administration
Identifiers
URN: urn:nbn:se:umu:diva-136528OAI: oai:DiVA.org:umu-136528DiVA: diva2:1111928
External cooperation
Anonymous
Educational program
Retail and Supply Chain Management Program
Presentation
2017-05-29, 10:14 (English)
Supervisors
Examiners
Available from: 2017-06-20 Created: 2017-06-19 Last updated: 2017-06-20Bibliographically approved

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CiteExportLink to record
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Citation style
  • apa
  • harvard1
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