Pursuing Strategic Innovation in Outsourcing Relationships: Towards an Innovation-molding Process

Abstract

Outsourcing service providers are progressively being seen not just as efficient partners to handle peripheral tasks, but also as potential sources of impactful innovations. However, as clients reset the bar from cost efficiencies to mutual strategic value creation, the outcomes far too often fail to live up to such ambitious goals. This increasingly prevalent issue takes center stage in our conceptual paper, wherein we investigate the dynamics and effects of (mis)aligned strategic goals at the client- and service provider-side during the joint innovation formation process. By integrating goal-framing theory as the underlying theoretical perspective and drawing on relevant IS outsourcing and distributed innovation literature, we introduce the innovation-molding framework to shed light on the influence of strategic goals on collaborative activities at each phase of the development process in innovation-focused outsourcing engagements. We contribute to IS outsourcing literature and offer some directions for future research related to the emerging innovation through outsourcing stream.