The delivery of IS services is resource consuming in all organizations. In an era in which management optimization is at the base of competitive advantage, sourcing options must be judged carefully. Traditionally sourcing options involve decisions of make (insourcing) or buy (outsourcing). However theory and practice have shown that these options present certain problems. Although outsourcing has allowed firms to concentrate on their core competencies, it has also shown several issues. Insourcing, on the other hand, does not allow a great deal of flexibility and requires staff growth. Investigating the sourcing decision making process in a Spanish and an Italian organization faced with the sourcing dilemma, we identify a “third way” where these companies engage in the creation of intermediate entities, internal markets, that mediate the emerging sourcing needs between the focal organization and the market. The internal market mechanism shown in this paper acts as a buffering mechanism protecting the organization form the risks associated with in- and outsourcing allowing companies to concentrate their resources on core competences, but, at the same time, maintaining a high level of control on the organization which plays as outsourcer.
An Empirical Investigation of Internal Markets as a Sourcing Option for The Delivery of IS Services
MOLA, Lapo;
2011-01-01
Abstract
The delivery of IS services is resource consuming in all organizations. In an era in which management optimization is at the base of competitive advantage, sourcing options must be judged carefully. Traditionally sourcing options involve decisions of make (insourcing) or buy (outsourcing). However theory and practice have shown that these options present certain problems. Although outsourcing has allowed firms to concentrate on their core competencies, it has also shown several issues. Insourcing, on the other hand, does not allow a great deal of flexibility and requires staff growth. Investigating the sourcing decision making process in a Spanish and an Italian organization faced with the sourcing dilemma, we identify a “third way” where these companies engage in the creation of intermediate entities, internal markets, that mediate the emerging sourcing needs between the focal organization and the market. The internal market mechanism shown in this paper acts as a buffering mechanism protecting the organization form the risks associated with in- and outsourcing allowing companies to concentrate their resources on core competences, but, at the same time, maintaining a high level of control on the organization which plays as outsourcer.
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