Running Head: JOURNAL ARTICLE REVIEW 6
Journal Article Review 6
Journal: Outsourcing as seen from the perspective of knowledge management
Liberty University
BUSI 613
Professor: Dr.
Quigg
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The importance of managerial knowledge before outsourcing
Bustinza, O. F., Gutierrez-Gutierrez, L. J., Molina, L. M. (2010). Outsourcing as seen from the
perspective of knowledge management. Journal of Supply Chain Management, 46(3),
23–39.
Summary
In the journal "Outsourcing as seen from the perspective of knowledge management,"
Bustinza, Molina, and Gutierrez-Gutierrez (2010), studied the decisions managers take to
outsource from a knowledge-based perspective. Bustinza, Molina, and Gutierrez-Gutierrez
specifically wanted to figure out how knowledge decisions impact the success of outsourcing for
the business. In the business world, outsourcing can be a risky decision, and this is why
executives are increasing the organization's bank of knowledge. Some organizations consider
knowledge to be a resource in the outsourcing decisions managers make on a daily basis. In their
research, Bustinza et al., (2010) consider the idea that the knowledge-based view and the RBV
theory impact the immediate and future success of an organization (pp. 23-24).
The study centers on the concept that some organizations perform better because of their
competitive advantage due to the knowledge-based resource. This study presents the hypothesis
on the knowledge-based view and how outsourcing decisions are competitive or not, based on
RBV or the competitive advantage organizations have. Furthermore, some organizations separate
the knowledge-based assets from the cost related assets of on organization. Bustinza et al.,
(2010) further discuss based on a survey study, the idea that the separation between the monetary
resources and capabilities has implications on the outsourcing decisions managers make.
Bustinza et al., (2010) explore the concept of resources, and that sometimes it is challenging for
individual organizations to successfully categorize resources (pp. 23-24).
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Statement of the Author’s Purpose
Bustinza et al., (2010) were motivated to conduct the survey and the necessary research for
the relationship that exists between capability and outsourcing to enlighten previous studies that
do not support the knowledge-based theory. The study also suggests that when outsourcing is
done based on knowledge theory, the organization can benefit from cost reduction and an
increase in quality (Bustinza et al., 2010, p. 23 and Young, 2014, p. 324). Further, Bustinza et al.,
(2010) believe that organizations that have an opposing view on the benefits of outsourcing have
not reached the point of separating between resources related to finance and resources related to
human capacity. Bustinza et al., seek to show that when organizations separate resources
according to their corresponding value, those organizations outperform the others. Bustinza et
al., are a thrill to inspire organizations to implement the findings of the study so that knowledge-
based outsourcing becomes the standard (p. 24).
Background of the Issue
According to Bustinza et al., (2010) knowledge is so important to managerial decision making
in regards to outsourcing, that it is becoming a field of its own called, the theory of resources and
capabilities. This approach is built on tacit knowledge, which is the set of capacities that a person
acquires on the job through time by direct experience. It is believed that these set of skills are
difficult to transfer since it is personal and varies from person to person, even among individuals
performing the same job (p. 24). Bustinza et al., (2010) suggest that service companies can
benefit substantially from outsourcing, especially when knowledge is of high quality and easily
accessible (pp. 25-26). Additionally, when it comes to tacit knowledge, Bustinza et al., (2010)
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argue that it is important for an organization to find ways to share knowledge in collaboration.
Furthermore, even though tacit knowledge is difficult to transfer, organizations are looking for
ways in which that knowledge can become less tacit, and benefit everyone in the organization (p.
26).
On the study conducted by Bustinza et al., (2010), regarding service, and the importance of
quality of knowledge to capability in successful outsourcing; the results supported the hypothesis
that quality knowledge improves outsourcing relationships. Bustinza et al., (2010) call this
“collaborative know-how” (p. 27). Also, the knowledge of collaboration is imperative to
suppliers and the business. However, even in regards to service firms, when knowledge is too
tacit, it is best to continue to perform that service aspect of the company at corporate
headquarters. Nevertheless, the results of the study approve the idea that quality knowledge suits
outsourcing best, versus, the inverse relationship in regards to tacit knowledge (pp. 28-34).
According to Bustinza et al., (2010), when it comes to know-how outsourcing, the firm can
benefit from a competitive advantage that could also increase competence (pp. 33-34).
Supply Chain Management Application Relevant to Article
Young (2014), also addresses the concept of quality in regards to knowledge about the service
sector. Young (2014), states that without an understanding of the process behind quality or the
concept of knowledge, Bustinza et al., (2010) presented, quality is compromised. Young (2014),
states that “quality is inseparable from the processes that produce them” (p. 325). Bustinza et al.,
(2010), also suggest that in the field of supply chain management, logistics is an area in which
both tacit knowledge and quality and capability, and the breakdown of tacit knowledge is
important to outsourcing (p. 34). An interesting study conducted by Lam and Alton (2009),
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presents a response to the negative correlation between too much tacit knowledge and
outsourcing (p. 28).
Lam and Alton (2009), propose that an excellent alternative to knowledge management in
regards to quality for outsourcing purposes is knowledge outsourcing. In their study, Lam and
Alton (2009), demonstrated that outsourcing knowledge is an excellent way to break the barrier
Bustinza et al., (2010) to collaboration between peers (Lam and Alton, 2009, p. 29). Lam and
Alton, (2009), discuss the importance of knowledge management and that a way to increment a
culture of knowledge in the organization is to outsource knowledge management itself (p. 30).
Bustinza et al., (2010) focused their study on the importance of quality in knowledge
management. Whereas, the recent research performed by Runar and Durst, 2014 their
conclusions showed that quality is of high importance to the current trend that Lam and Alton,
2009 examined in regards to knowledge outsourcing (Runar and Durst, 2014, p. 803).
Managerial Implications
Managers should first identify tacit knowledge by its level; then managers should outsource
similar knowledge that has become less tacit until the highest tacit knowledge becomes easier to
transfer. The managers should find creative ways to teach others and keep a record of what they
do and how they do it. Another way for knowledge to become less tact is to try knowledge
outsourcing, perhaps some part of the training and development. If the company chooses to
outsource knowledge, one way to increase quality would be to outsource across the world, in
which others could learn from different corporate culture. One way in which managers could
take advantage of outsourcing knowledge is the advances in technology, in which meetings could
be held with live 24-hour Internet access and portable devices.
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Another way in which managers could thrive in their quest to make knowledge less tacit is to
merge with other companies in regards to the educational aspect of the organization. Similar
companies could create one large standard training center in which organizations from all over
the world share knowledge regarding industry. Managers should share knowledge instead of
being feeling that if they share too much, they may have leaked some important aspect of the
organization. Perhaps when knowledge is too tacit, it may be the case that managers may not
want to share too much information with other managers or subordinates. Nevertheless,
delegation and collaboration is key to the success of the organization. Given that once customers
become loyal to a service, they may not be likely to switch, managers should be open to sharing
knowledge beyond the boundaries of an organization, and allow everyone to grow.
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References
Bustinza, O. F., Molina, L. M., & Gutierrez-Gutierrez, L. J. (2010, July). Outsourcing as seen
from the perspective of knowledge management. Journal of Supply Chain Management,
46(3), 23+. Retrieved from http://p2048-ezproxy.liberty.edu.ezproxy.liberty.edu/login?
url=http://go.galegroup.com.ezproxy.liberty.edu/ps/i.do?
p=AONE&sw=w&u=vic_liberty&v=2.1&it=r&id=GALE
%7CA232818178&asid=2156cd9f0dc37e43da3d86a655fb1ea5
Lam, W., & Alton Y.K. Chua. (2009). Knowledge outsourcing: An alternative strategy for
knowledge management. Journal of Knowledge Management, 13(3), 28-43.
doi:http://dx.doi.org.ezproxy.liberty.edu/10.1108/13673270910962851
Runar Edvardsson, I., & Durst, S. (2014). Outsourcing of knowledge processes: A literature
review. Journal of Knowledge Management, 18(4), 795. Retrieved from
http://ezproxy.liberty.edu/login?
url=http://search.proquest.com.ezproxy.liberty.edu/docview/1660768781?
accountid=12085
Young, G. (2014). Supply chain management (Custom.). New York, NY: McGraw-Hill
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