Portfolio of controls in outsourcing relationships for global new product development

Abstract

Due to increasing globalization and technological discontinuities, firms strive to develop new product capabilities and flexibilities by engaging in outsourcing activities and adopting modular systems. However, these strategies contain risks of opportunistic expropriation of tacit knowledge and costs related to monitoring sourcing partners who are geographically and culturally distant. This study examines the antecedents of control mechanisms through which firms manage the risks and costs associated with outsourcing relationships in global technology-intensive markets. Modularity in design is hypothesized as a moderator of model relationships because it can serve as a substitute for formal or informal controls in a "controls portfolio". (C) 2009 Published by Elsevier Inc.