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Outsourcing Primer - Background Note - Faculty & Research - Harvard Business School
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</div> </header> <!-- STARTINDEX --> <div class="mainContainer link-controller" runat="server"> <main id="skipto-main" tabindex="-1" aria-label="Page content"> <div class="page-header inherit-bg" id=""> <div class="page-header-inner"> <div class="container tablet-container mobile-container vrule8 " style="position:relative;" id=""> <ul class="nu responsive-breadcrumb toggle-container"> <li class="responsive-breadcrumb-toggle"><a href="#" class="toggle-button">…</a><span class="txt-arrow" aria-hidden="true">→</span></li> <li><a href="https://www.hbs.edu/Pages/default.aspx" class="ink">Harvard Business School</a><span class="txt-arrow" aria-hidden="true">→</span></li> <li><a href="/faculty/Pages/default.aspx" class="ink">Faculty & Research</a><span class="txt-arrow" aria-hidden="true">→</span></li> </ul> <div class="row tablet-row"> <div class="span11"> <div class="alpha light black mobile-hidden tablet-hidden" style="margin: 0;"> Publications </div> <div class="alpha regular black desktop-hidden" style="margin: 0;"> Publications </div> <div class=""> <div class="sticky-header-hidden"></div> </div> </div> </div> <div class="shim22 mobile-hidden"></div> <div class="shim14 mobile-visible"></div> </div> </div> </div> <div class="container mobile-container tablet-container vrule8"> <div class="cap mobile-cap tablet-cap"></div> <div class=""> <div class="row"> <div class="span8"> <div class="row tablet-row mobile-row"> <div class="span8 tablet-span12 mobile-span12 item-detail"> <ul class="linear mu-uc datesource" style="margin-top:-4px"> <li>October 2024</li> <li class="meta-content-type"><a href="/faculty/research/publications/Pages/default.aspx?contentType=Teaching Materials">Background Note</a></li> <li>HBS Case Collection</li> </ul> <div class="shim5"></div> <h1 class="beta">Outsourcing Primer</h1> <div class="shim14"></div> <div class="nu add-underline">By: <a href="https://www.hbs.edu/faculty/Pages/profile.aspx?facId=194874&click=byline">Willy C. Shih</a></div> <div class="shim10"></div> <ul class="linear metadata"> <li class="nu"><span class="mu" style="padding-right: 5px;">Format:</span>Print</li> <li class="nu"><span class="bar"> | </span><span class="mu" style="padding-right: 5px;">Language:</span>English</li> <li class="nu"><span class="bar"> | </span><span class="mu" style="padding-right: 5px;">Pages:</span>9 </li> </ul> <div class="shim20"></div> <div class="widget-sharebar" data-style="framework" data-print="true" data-url="https://www.hbs.edu/faculty/Pages/item.aspx?num=66533">ShareBar</div> <div class="shim25"></div> <div class="row tablet-row mobile-row"> <div class="span8 tablet-span12"> <div class="body-container"> <h2 class="description-heading kappa-uc boldcn">Abstract</h2> <div class="description-content add-underline">This note provides some background on one of the key resource allocation decisions managers make as they develop and produce products and services: what should they do with the walls of their own firm, and what they should depend upon suppliers or contractors to perform. This note describes substitution-based and abstention-based outsourcing decisions, and considers advantages and disadvantages. It looks at the economic logic, and discusses asset specificity, specialization, and the impact of modulari partitioning of systems, as well offshoring and some of the recent challenges and controversies.</div> <div class="shim30"></div> <h2 class="keywords-heading kappa-uc boldcn">Keywords</h2> <div class="mu regular add-underline"><a href="/faculty/research/publications/Pages/default.aspx?q=Outsourcing">Outsourcing</a>; <a href="/faculty/research/publications/Pages/default.aspx?q=Offshoring And Outsourcing">Offshoring And Outsourcing</a>; <a href="/faculty/research/publications/Pages/default.aspx?q=Manufacturing Industry">Manufacturing Industry</a>; <a href="/faculty/research/publications/Pages/default.aspx?q=United States">United States</a>; <a href="/faculty/research/publications/Pages/default.aspx?q=Asia">Asia</a></div> <div class="shim30"></div> <h2 class="citation-heading kappa-uc boldcn">Citation</h2> <div class="mu light citation add-underline">Shih, Willy C. "Outsourcing Primer." Harvard Business School Background Note 625-069, October 2024.</div> <div class="shim30"></div> <ul class="linear"> <li><a href="http://cb.hbsp.harvard.edu/cbmp/product/625069-PDF-ENG" class="btn hbsred-bg black-bg-onhover white kappa-uc boldcn no-append" role="button">Educators</a></li> </ul> </div> </div> </div> </div> </div> <div class="tablet-rail4 mobile-rail4"></div> </div> <div class="span4 vrule-offset"> <div> <h3 class="kappa-uc" style="margin-top:-5px">About The Author</h3> <div class="shim20"></div> <div class="row-left"> <div class="span1"><a href="/faculty/Pages/profile.aspx?facId=194874"><img src="https://www.hbs.edu/Style%20Library/api/headshot.aspx?id=194874" class="fluid" style="border: 3px solid black;" alt="" width="80"></a></div> <div class="span99"> <h4 class="kappa"><a href="/faculty/Pages/profile.aspx?facId=194874">Willy C. Shih</a></h4> <div class="nu">Technology and Operations Management</div> <div class="shim10"></div> <div class="more"><span class="txt-arrow" aria-hidden="true">→</span><a href="/faculty/Pages/profile.aspx?facId=194874&view=publications">More Publications</a></div> </div> </div> </div> <div class="hr pubdetails-sidebar-divider" style="margin: 30px 0px;"></div> <div class="sidebar-margins"> <h3 class="kappa-uc" style="margin-top: 0px;">More from the Author</h3> <ul class="media-list3 sidebar-stream "> <li class="media"> <div class=""> <div class=""> <ul class="linear mu-uc"> <li>September 2024</li> <li class="ash">Faculty Research</li> </ul> <h4 class="kappa-uc"><a href="https://www.hbs.edu/faculty/Pages/item.aspx?num=66258" class="block" style="color: #2AA296;border:!px solid red;">Cathay Cargo: Turnaround Short Haul, or Double Crew Long Haul?</a></h4> <div class="nu add-underline">By: <a href="https://www.hbs.edu/faculty/Pages/profile.aspx?facId=194874&click=byline">Willy Shih</a> and Billy Chan</div> </div> </div> </li> <li class="media"> <div class=""> <div class=""> <ul class="linear mu-uc"> <li>July 2024 (Revised October 2024)</li> <li class="ash">Faculty Research</li> </ul> <h4 class="kappa-uc"><a href="https://www.hbs.edu/faculty/Pages/item.aspx?num=66104" class="block" style="color: #2AA296;border:!px solid red;">Knowledge Transfer: Toyota, NUMMI, and GM</a></h4> <div class="nu add-underline">By: <a href="https://www.hbs.edu/faculty/Pages/profile.aspx?facId=194874&click=byline">Willy Shih</a></div> </div> </div> </li> <li class="media"> <div class=""> <div class=""> <ul class="linear mu-uc"> <li>July 2024</li> <li class="ash">Faculty Research</li> </ul> <h4 class="kappa-uc"><a href="https://www.hbs.edu/faculty/Pages/item.aspx?num=66052" class="block" style="color: #2AA296;border:!px solid red;">District Heating: An Overview</a></h4> <div class="nu add-underline">By: <a href="https://www.hbs.edu/faculty/Pages/profile.aspx?facId=194874&click=byline">Willy Shih</a> and <a href="https://www.hbs.edu/faculty/Pages/profile.aspx?facId=386263&click=byline">Michael W. Toffel</a></div> </div> </div> </li> </ul> </div> <div class="html "> <div class="popout-related-list" style="display:none;"> <div class="popout-inner"> <div class="mu" style="margin-bottom: 10px;">More from the Author</div> <ul class="unbulleted"> <li class="nu"><a href="https://www.hbs.edu/faculty/Pages/item.aspx?num=66258">Cathay Cargo: Turnaround Short Haul, or Double Crew Long Haul?</a> By: Willy Shih and Billy Chan</li> <li class="nu"><a href="https://www.hbs.edu/faculty/Pages/item.aspx?num=66104">Knowledge Transfer: Toyota, NUMMI, and GM</a> By: Willy Shih</li> <li class="nu"><a href="https://www.hbs.edu/faculty/Pages/item.aspx?num=66052">District Heating: An Overview</a> By: Willy Shih and Michael W. Toffel</li> </ul> </div> </div> </div> </div> </div> </div> <div class="base mobile-base tablet-base"></div> <div class="vrule-gutter-base desktop-visible"></div> </div> </main> </div> <!-- ENDINDEX --> <div class="clear"></div> </div> <div class="back-to-top"><a href="#" class="icon-back-to-top" aria-label="Scroll back to top of page"></a></div><footer role="contentinfo"> <div class="universal-footer noindex" data-feature="universal-footer"> <div class="color-framework grid-framework type-framework component-framework pattern-framework js-framework responsive-framework"> <div class="black-bg link-controller white universal-footer-v3 responsive-type"> <div class="container tablet-container mobile-container"> <div class="shim48 desktop-visible"></div> <div class="shim36 tablet-visible"></div> <div class="shim28 mobile-visible"></div> <div class="hidden">ǁ</div> <div class="row tablet-row mobile-flip crawler-noindex"> <div class="span6 mobile-span6 tablet-span7 mobile-stacks"> <div 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