Global disaggregation of information-intensive services

Article Abstract:

Companies are increasingly dispersing their information-intensive services to enhance their international competitiveness and to exploit the opportunities created by innovations in information technology and the emergence of a international labor force. A study is conducted to examine the opportunities and challenges that arise from the global disaggregation of such services. Several advantages of disaggregation are identified, including cost reduction, shorter design and development cycle time, availability of a large pool of skilled workers, and access to bigger markets. Among its disadvantages are the lack of control over quality and schedules; communication and coordination problems; and uncertain social, economic and political environments. A taxonomy of disaggregation is presented, as well as a theoretical framework that provides guidelines for effectively selecting activities to be disaggregated internationally.

International aspects, Information services

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Coordinating investment, production, and subcontracting

Article Abstract:

Analytic models were employed in the study of two prevalent business practices across various industries, namely, outsourcing and subcontracting. The study involved a two-stage, two-market, two-player stochastic game to evaluate the option of outsourcing and subcontracting in improving system coordination and financial performance. Outsourcing conditions for price-only contracts, incomplete contracts and state-dependent contracts were analyzed. It was observed that among the three contract types, only state-dependent contracts have the ability to get rid of all coordinate capacity investment decisions and decentralization costs. Results also provided evidence that the option value of subcontracting rises due to the volatility and negative correlation of markets.

Management Theory & Techniques, Subcontracting

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Incomplete information, task assignment, and managerial control systems

Article Abstract:

The effect of various information structures on managerial control system design is examined, with focus on their impact on the optimal task assignment decision. The internal employee is distinguished from an outside supplier on four different informational dimensions. The appropriate design of two major elements, namely, the principal's control of predecision information flow and incentive contracts, is found to be helpful in removing inefficiencies in resource allocation brought about by agents' incomplete information at the time of contracting. Results show that a firm will contract with the outside supplier for performing an upstream task and contract with an internal employee to finish the downstream task more frequently than the other way around.

Information management, Control systems

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