Outsourcing of Organizational Routines : Knowledge, control, and learning aspects

Organizational routines that are critical to learning, flexibility, and adaptation explain the behaviour of the business organization. When organizational routines cross the boundary of the organization, variability and stability are affected. This study emphasizes organizational routines committed in specific outsourcing or insourcing situations to clarify the dynamics of organizational routines that are cut off and put out of context.The theoretical analysis of organizational routines shows how three aspects of knowledge, control, and learning that are challenged by outsourcing or insourcing are able to explicate loss of organizational memory, loss of accountability, or loss of predictability over the business process. When organizational routines of an outsourced function are surgically removed, the organization is left with direct and indirect so called ‘phantom limbs pain’ that diminishes the effectiveness of the remaining activity system. Routines that are no longer in use result in reduced control and a weakened organizational memory, no longer updated for learning.Earlier research has shown the complexity of organizational routines. The interpretation of social phenomena is never a straightforward activity. The multifaceted patterns of the phenomenon of organizational routines are difficult to study, directly observe, and therefore well suited for a hermeneutical approach.The analysis emphasizes organizational boundaries and in particular control and accountability at lower organizational levels to present a new understanding of boundary management and the role of local knowledge as a link between internal and external systems in outsourcing processes. Knowledge does not necessarily erode when routines are outsourced if knowledgeable employees intervene and can regain knowledge. Concepts like tacit knowing, trading zone, and path dependency show how transfer of knowledge is possible when boundary spanning is organized in communities of practice.Three different conventional industry cases illustrate the theoretical analysis of how boundaries of time and space are challenged and broken down both within and between organizations. The study has resulted in contributions to thedifferent theoretical areas of organizational routines, knowledge management, control, organizational learning, and boundary management as well as some practical managerial advices