Essays on knowledge outsourcing
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Due to rapid changes in technology, science, and the marketplace, while recognizing knowledge as a key resource for competitive advantage, many firms lack the internal knowledge resources to achieve their goals. To address this challenge, firms increasingly rely on outsourcing knowledge from external entities such as consultancies. Since I personally observed this global trend at Samsung, I could fully understand the importance of this challenge. While there is a substantial amount of literature examining supplier-buyer interactions for physical components and finished goods in Operations Management, studies that provide managerial implications on the interactions between a buyer (she) and a supplier (he) for knowledge outsourcing are limited. In this dissertation, I study how firms effectively manage knowledge outsourcing. In particular, I focus on investigating how factors such as absorptive capacity, uncertainty, information asymmetry, and competition impact firms’ decisions and the outcomes of knowledge outsourcing. Using a game-theoretic formulation, the first essay (Chapter 2) studies how a buyer’s ability to understand and apply outsourced knowledge (i.e., absorptive capacity) affects the interactions between the buyer and the supplier. It also investigates the impact of uncertainty about the amount of knowledge needed and asymmetric information regarding a key element of absorptive capacity on firms’ decisions and the outcomes of knowledge outsourcing. To build further implications on knowledge outsourcing, the second essay (Chapter 3) incorporates market competition between two buyers who outsource knowledge from a common supplier. It examines how competition in the downstream market impacts the buyers’ knowledge outsourcing decisions and the supplier’s service strategies. As the current literature on knowledge outsourcing remains in the early stages, the third essay (Chapter 4) reviews current studies to identify what is known and unknown about knowledge outsourcing at present, and provides a future research agenda. Overall, my dissertation contributes a significant building-block for Operation Management to better address managerial challenges in the knowledge economy.