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Outsourcing of strategic resources and capabilities: opposing choices in the commercial aircraft manufacturing

Outsourcing of strategic resources and capabilities: opposing choices in the commercial aircraft... Purpose – This paper aims to address the questions of different outsourcing strategies between Airbus and Boeing and point out the theoretical limits of the resource-based view (RBV) approach that must be broadened with a finance perspective. Owing to the complexity of systems, the aircraft industry is nowadays structured around a well-organised value chain of product development and manufacturing. However, according to the RBV, capabilities attached to some systems and components are strategic resources and must be kept in house to maintain competitive advantage. In commercial aircraft avionics, critical systems such as flight controls fall directly under this rule, due to substantial risks of passenger safety they deal with. Design/methodology/approach – This study is based on two comparative studies concerning the A330/340 and A350 programmes at Airbus and their equivalents at Boeing, the B777 and the B787. The data are both primary (financial and patent data) and secondary (semi-structured interviews and documentation. Findings – The main result highlights the limits of the RBV model to understand why Airbus has chosen to re-internalise the development and production of flight control systems contrary to Boeing. For both, cost reduction is the main objective of outsourcing, but European firms are more careful with critical resources. The financialisation of aircraft manufacturers’ strategies is another explanatory factor relevant to understand why Boeing outsources strategic resources such as flight controls. Research limitations/implications – The authors demonstrate the potential of multiplication of research methods to address a question. Second, they try to bring together different theories in a preliminary effort, which gives them some promising stuffy perspective for future works. Practical implications – By addressing both the RBV and the financialisation perspectives, the authors provide an interesting view of the COmplex Products and Systems (CoPS) challenges. Social implications – The findings of this research must provide key of interpretation for business managers, which may consider the two faces, knowledge management and financial, to explain corporate performance. Originality/value – Several originalities are relevant in this work. From a methodological point of view, the authors offer a comparison between the two main players of commercial aircraft manufacturing, an oligopolistic industry. Second, the data they choose to rely on are both qualitative and quantitative to strengthen the results. Third, at a micro level, this study is original in its approach of linking outsourcing to financialisation. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Knowledge Management Emerald Publishing

Outsourcing of strategic resources and capabilities: opposing choices in the commercial aircraft manufacturing

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1367-3270
DOI
10.1108/JKM-01-2015-0040
Publisher site
See Article on Publisher Site

Abstract

Purpose – This paper aims to address the questions of different outsourcing strategies between Airbus and Boeing and point out the theoretical limits of the resource-based view (RBV) approach that must be broadened with a finance perspective. Owing to the complexity of systems, the aircraft industry is nowadays structured around a well-organised value chain of product development and manufacturing. However, according to the RBV, capabilities attached to some systems and components are strategic resources and must be kept in house to maintain competitive advantage. In commercial aircraft avionics, critical systems such as flight controls fall directly under this rule, due to substantial risks of passenger safety they deal with. Design/methodology/approach – This study is based on two comparative studies concerning the A330/340 and A350 programmes at Airbus and their equivalents at Boeing, the B777 and the B787. The data are both primary (financial and patent data) and secondary (semi-structured interviews and documentation. Findings – The main result highlights the limits of the RBV model to understand why Airbus has chosen to re-internalise the development and production of flight control systems contrary to Boeing. For both, cost reduction is the main objective of outsourcing, but European firms are more careful with critical resources. The financialisation of aircraft manufacturers’ strategies is another explanatory factor relevant to understand why Boeing outsources strategic resources such as flight controls. Research limitations/implications – The authors demonstrate the potential of multiplication of research methods to address a question. Second, they try to bring together different theories in a preliminary effort, which gives them some promising stuffy perspective for future works. Practical implications – By addressing both the RBV and the financialisation perspectives, the authors provide an interesting view of the COmplex Products and Systems (CoPS) challenges. Social implications – The findings of this research must provide key of interpretation for business managers, which may consider the two faces, knowledge management and financial, to explain corporate performance. Originality/value – Several originalities are relevant in this work. From a methodological point of view, the authors offer a comparison between the two main players of commercial aircraft manufacturing, an oligopolistic industry. Second, the data they choose to rely on are both qualitative and quantitative to strengthen the results. Third, at a micro level, this study is original in its approach of linking outsourcing to financialisation.

Journal

Journal of Knowledge ManagementEmerald Publishing

Published: Sep 14, 2015

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