Abstract
A recent Offshoring Research Network (ORN) global survey of offshoring shows that since 2004 management concerns about operational issues on achieving the benefits of offshoring have increased significantly. In this paper we examine inter-task interdependence, a key operational determinant of inter-site interaction and communications in offshoring. We analyze existing theories of interdependence to examine the extent to which they provide guidance for understanding the interaction and communication requirements between work segments that are offshored and distributed across the globe. Using a series of mini-cases on globally distributed work (GDW), we show how the traditional typology of interdependence developed in the 1960s and 1970s is no longer adequate for understanding and managing task interdependencies in GDW. We propose three concepts to address this problem: integration interdependence, “hand-offs”, and information “stickiness”. We then show how our revised typology of interdependence enables a better understanding of the interactions and communication requirements between sites. Using this revised theory we propose guidelines for work design, and examine their implications for practical offshoring and work-distribution decisions. Implications for theory and practice for MNEs engaged in offshore relationships are discussed.
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Notes
The designation of a location as “offshore”, “nearshore”, or “onshore” is in the eye of the beholder. The authors are indebted to David McCoy (www.gartner.com/research/fellows/asset_55353_1175.jsp), Gartner Fellow and Vice-President, for pointing out that “For Hawaii every place is offshore.” In this age of true multinationals (for a company to be truly multinational it has to be “multi” and not “mono” national) and global partnerships, designating one country as the “country of origin” to define “offshore” can be rather limiting. In many cases work originates from different sites, depending upon the phase the work is in.
Depending upon the level of analysis, an actor performing a task can be either an individual, a computer, an organizational sub-unit, an organization, or a group of organizations (network).
The focus of this paper is on task interdependence. Along with task uncertainty and size, task interdependence is considered a key determinant of choice of coordination modes. Thus it is important to precisely understand the differences in various types of inter-task interdependence before one can use this information to select and design appropriate coordination mechanisms.
We recognize that some of these challenges can also exist within a “domestic” distributed work context, especially in large and culturally diverse countries such as India, or in regions such as the European Union. However, it is our contention that the geographical, temporal, cultural, regulatory, and infrastructure gaps present in a globally distributed work context magnify the gaps and their consequences and challenges.
The often used term “paper shuffling” is an apt, though somewhat negative, description of this process.
The process of theory evaluation and construction in this paper is similar to Karl Weick's method of “theory construction as disciplined imagination” (Weick, 1989). Following Weick, we first build a set of representations of the possible work patterns in GDW from published reports, first-hand observations, interviews, and scenarios. We use these representations (see Table 1) to first evaluate the extant theory, and construct a problem statement (in our case the requirements for revising the classic typology). Next we refine the extant theory (i.e., suggest a solution to the problem statement), and then examine the appropriateness of the theoretical solution by conducting “thought experiments” with both the scenarios in Table 1, as well as in the design of two decision situations in the section on application of the revised taxonomy.
To be precise, Mintzberg (1979) interprets pooled interdependence somewhat differently from Thompson (1967) and Van de Ven et al. (1976). Whereas Thompson and Van de Ven et al. define pooled interdependence as the pooling of task outcomes (i.e., the use of pool as a verb), Mintzberg's interpretation is that, in the pooled condition, interdependence arises because actors are sharing the same pool of resources (i.e., pool as a noun referring to inputs). Grandori (1997) is even more explicit in defining pooled interdependence as that which arises from sharing a pool of resources. She goes on to point out that this resource-based interdependence is likely to be as intense as team interdependence, and thus needs to be placed higher on the scale of interdependencies. While both views provide complementary interpretations of pooled interdependence, we choose to focus upon the more commonly accepted traditional interpretation of Thompson and Van de Ven et al.: that is, pooling of outcomes, and not input resources. This is also consistent with the idea that we are focusing on task interdependencies and not resource interdependencies.
Thompson (1967) refers to units as individual performers of a certain task. Van de Ven et al. (1976) use the word “unit” to denote a particular organizational unit that performs the task. We follow the latter, more general concept of a work unit. Thus in Figure 1 the circles represent a work unit, and the arrows between them task interdependencies.
Grandori (1997) calls both sequential and reciprocal interdependence “transactional interdependence”. She argues that both sequential and reciprocal interdependence are essentially related to a transaction. That is, the flows of the object of work across two action points are essentially similar, except for bidirectionality in reciprocal interdependence.
The word “team” can have two different meanings. Van de Ven et al. (1976) use the term “team interdependence” as a descriptor of highly intense, simultaneous and joint dependence. However, “team” is also used to define an organization structure such as a group working together on a task (Katzenbach & Smith, 1993). With the second definition, work can potentially flow between team members in a sequential, reciprocal, or intense manner. In some cases, e.g., a call center, team members may even be independent of each other as in pooled interdependence. To avoid confusion, we use a more precise term – “intense interdependence”.
The scenarios presented here are simplified examples of real-world work cases observed during our 14-year-long study of globally distributed work. They have been simplified to reduce the complexity, while still retaining aspects needed to illustrate the case.
The phrase “throw it over the wall” is often used in information systems development projects where outcomes of one project task or phase are “thrown over the wall” to the party performing the next task, without any consideration of whether the other party receives the outcomes or not, or whether the outcomes are understood.
It may be argued that parts can have intrinsic value in themselves – for example, a diamond as part of a ring, or an inventory of automobile parts that can be sold either for maintenance or at the time of liquidation of the company. However, if we take the part in the context of the desired outcome, in the former case of a ring, a diamond cannot be worn on a finger by itself. Nor can an engine block be driven by itself.
Williamson (1981) in turn refers to Thompson (1967) to define the idea of a transaction.
The term transactional interdependence as defined here is also consistent with the origins of the term transaction as “trans” or across and “action”, that is, something that goes across two actions.
On the other hand, the interaction between an epicure and a sommelier or waiter at an haute cuisine restaurant is likely to be highly sticky.
For the sake of simplicity, at this time we will assume a single actor for each site. However, the models in Figure 3 can easily be modified to show more than one actor per site.
We are not implying that work design in the global distribution of non-sticky work is trivial. As current practice and research on global supply chain management clearly show, it includes complex issues of logistics, routing, regulation compliance, and so on. However, since in this paper our focus is on the effect of global distribution on interdependence, these issues can be considered as introducing additional tasks that are related to existing work tasks through the overall taxonomy of interdependence.
Our recent discussions with SAP suggest that at this time SAP is also considering political and social criteria for R&D work design and allocation. For example, the Chinese division SAP has recently proposed that in parity with the Waldorp and Palo Alto research units, they too would like to establish and staff a pure research unit in Shanghai. While at present there is no direct economic justification for this unit, a combination of local pride and pressure from the Chinese authorities to locate more R&D in China has resulted in an approval for setting up a research unit in Shanghai. The consequences and the actual value/costs of this unit will become known only after it becomes operational in 2008.
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Acknowledgements
I acknowledge former Editor-in-Chief Arie Lewin and the three anonymous reviewers who helped us craft a theoretical argument that will hopefully impact on how offshored and globally distributed work is conceptualized and designed in the future. We also acknowledge FIU CIBER for their continued support of this project, Erasmus Research Institute for Management, the GDW Foundation, headquartered in Bangalore, India and its corporate partners, and the corporate executives in DBA program at the City University of Hong Kong, who gave us a chance to develop and test the ideas in the world of practice.
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Accepted by Arie Y Lewin, Editor-in-Chief, 28 January 2008. This paper has been with the authors for two revisions.
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Kumar, K., van Fenema, P. & von Glinow, M. Offshoring and the global distribution of work: Implications for task interdependence theory and practice. J Int Bus Stud 40, 642–667 (2009). https://doi.org/10.1057/jibs.2008.77
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DOI: https://doi.org/10.1057/jibs.2008.77