Executive Summary
In a business-to-business marketing context, many service firms provide integrated solutions to their business customers by organizing their own internal and external activities globally because their customers are demanding more complex integrated solutions that often involve technologies and services from multiple suppliers. As systems integrators, these firms act as a prime contractor organization responsible for the overall system design and integration of product and service components from both internal and external suppliers globally into a functioning system for an individual customer. In most cases, these firms integrate complex, knowledge-intensive products.
Knowledge-intensive business services (KIBSs) are those that consist of relatively intensive inputs of technology or human capital; they rely on social and institutional knowledge (e.g., accountancy, management consultancy) or technological knowledge (e.g., computer, research and development, engineering services). They are value-added service activities used to develop customized solutions to meet a customer’s unique needs. Given the predicted growth in global sourcing of KIBSs and their increasingly important role in innovation and value creation, examining the global sourcing strategy of KIBSs is urgent.
Murray, Kotabe, and Westjohn’s research provides important theoretical and managerial implications that differ from those related to other services. Specifically, the authors contribute to the understanding of global sourcing strategy of KIBSs by offering an explanation for the differential performance among firms, even when they use similar global sourcing strategies for KIBSs. Using a systems integrator as the sourcing firm’s perspective, the authors argue that complex KIBSs involve a complicated mixture of interfaces in that the performance of an individual KIBS is insufficient in defining the overall performance of the integrated KIBS system. Furthermore, after acquiring valuable external knowledge, a firm needs to use its absorptive capacity in exploiting externally generated knowledge, thereby transforming and commercially applying this knowledge to create firm value. Because the selection of the global sourcing strategy for one KIBS may pose a binding constraint on the other KIBSs, the sourcing firm must manage these interdependencies by achieving integration across the internally and externally sourced KIBSs.
Murray, Kotabe, and Westjohn propose a theoretical framework using a two-stage strategic fit model that emphasizes the conditions under which the global sourcing of KIBSs influences performance. Firms that strategically coalign sourcing strategy with the KIBS attribute for each KIBS activity should perform better than firms that lack coalignment. After selecting an appropriate sourcing strategy, the firm’s dynamic capabilities (i.e., absorptive capacity and integration capability) may accentuate or attenuate the performance of the strategy at the integrated KIBS system level. Thus, although managers may be tempted to source KIBSs globally on the basis of saving substantial amounts in labor costs, they should examine both the KIBS attributes and the firm’s dynamic capabilities. The selected sourcing strategy should depend on those characteristics.
Biography
Janet Y. Murray is E. Desmond Lee Professor for Developing Women Leaders and Entrepreneurs in International Business and Professor of Marketing at the University of Missouri-St. Louis. Her research interests focus on global sourcing and international marketing strategies, international strategic alliances, learning and knowledge transfer, and competitive strategy in transitional economies. As a recipient of four Best Paper Awards, her research has appeared in journals such as Journal of Marketing, Strategic Management Journal, Journal of International Business Studies, Journal of Business Research, Journal of International Marketing, Journal of World Business, Industrial Marketing Management, Journal of Business Research, Management International Review, International Marketing Review, and others. She serves on the editorial review boards for Journal of International Business Studies, Journal of International Marketing, Journal of International Management, and others. She is serving a two-year term (July 2009–June 2011) as the president of the Women of the Academy of International Business (WAIB).
Masaaki Kotabe holds the Washburn Chair Professorship in International Business and Marketing in the Fox School of Business at Temple University. He has written more than 100 scholarly publications, including the books Global Sourcing Strategy: R&D, Manufacturing, Marketing Interfaces (1992), Anticompetitive Practices in Japan (1996), Global Supply Chain Management (2006), and Global Marketing Management (2008, 4th ed).
Stanford A. Westjohn is Assistant Professor of Marketing and International Business in the College of Business at the University of Toledo. He holds a doctorate in international business and marketing from Saint Louis University. His research has been published in Journal of the Academy of Marketing Science, Journal of International Marketing, and International Marketing Review.
Journal International Marketing, Volume 19, Number 4, December 2009
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