Philip Runsten & Andreas Werr Stockholm School of Economics

1. Integrating Competencies in IT Outsourcing Projects – a study of knowledge boundaries and their reproduction Philip Runsten & Andreas Werr Stockholm School of Economics

2. Background and Purpose • Organizations increasingly engage in (temporary) interorganizational collaboration to gain and access knowledge • Current models of knowledge integration emphasize the importance of upfront investments in e.g. routines, directions or relationships • Current models of interorganizational collaboration have neglected the individual/group level where knowledge is enacted • Purpose: To discuss interorganizational knowledge integration as the joint work of individuals residing in different organizations in the pursuit of a common and temporary work task

3. Behavioural world Social action theory Social action theory B A Knowledge integration Appreciative system, media and language Role frame Appreciative system, media and language Role frame Framework

4. Appreciative systems a. knowledge boundaries • Differences in language and appreciative systems make it difficult for individuals with different competencies to interact and communicate • Differences in language and appreciative systems may be found both along functional boundaries and along organizational boundaries

5. Role frames and knowledge seeking • Actors’ understanding of their role and the way in which they bound their institutional setting determines what competencies they see as possible to seek and contribute to • Narrow, isolated role frames, establishing clear boundaries between actors and their responsibilities, are expected to impede the exploitation of complementary competencies • Overlapping role frames, binding actors together in a joint problem solving task are expected to support the exploitation of complementary competencies

6. Social action theory and knowledge integration • Actors’ social action theories collectively create a behavioural world conditioning the prerequisites for bridging differences in language and appreciative systems and role frames • Behavioural worlds in interorganizational, expertise-based relationships are expected to be characterized by model I behaviour and low psychological safety by default

7. Empirical illustration - IT outsourcing • Focus on the transition phase • comprises the move of applications and responsibilities to the outsourcing provider • Involves the design of new procedures and routines • Has the potential for innovation and learning • Involves a large number of actors from several different organizations • A process with escalating problems • Technical problems • Frustrated users • Dissatisfied buyer

8. Actors and organizations Peach IT org Cherry Tuna IT Application owner Erik IT manager Adam IT mgr. Peach Sales rep. Bertil Project mgr. Calle Project mgr. David Projekt-medarbetare Projekt-member Project-member IT expert Fredrik User User User IT Arkitekt Fredrik Subcontractor Subcontractor IT Arkitekt Fredrik Subcontractor

9. Appreciative systems and understanding • Different actors approach the situation from different appreciative systems • A technical system (Tuna project mgr, Tuna IT experts, Peach IT experts • A user oriented system (Cherry IT a. project mgr, user reprentatives, Tuna IT sales rep.) • Actors sharing appreciative systems interact well • “They [Tuna ITs personnel] are good IT-specialists. There are absolutely no problems, no problems whatsoever. They are very good guys. (Peach IT specialist)” • Interaction across appreciative systems is more problematic • “Although we discussed this up to the highest management level, the project manager [Calle] still doesn’t get it. The processes for the daily work, management, maintenance of the tasks agreed upon in the contract, which we pay for, are not understood by the project. That is bad…” (Cherry project manager)

10. Separating role frames and passivization • A shared framing of the situation as ”purchase of a business function” creates narrow roles and restricts integration • The provider doesn’t want to involve the customer as ”he has bought a function” • The customer wants to get involved, but feels he cannot demand it – as he has ”bought a function” • The customer’s IT specialists have ideas, but don’t want to intrude – after all its the provider of the functions who needs to make this work • The salesrep has sold a function, now it up to the technical people to make it work

11. Social action theories and the lack of integration • Striving for ”good collaboration” counteracts a deeper investigation into each others’ understandings • ”Pragmatic” solutions are sought… • Which implies avoiding conflict and blame and focusing on action rather than reflection • …In order to save actors’ face and avoid negative feelings • The different actors’ assumptions about the project and each other were never surfaced and tested

12. Findings • The integration of competencies is challenged by differences in language and appreciative systems along functional rather than organizational boundaries • Specialised and isolated role frames inherent in the buyer-supplier relationship underlying the concept of outsourcing separate and passivize actors, and thus inhibit the active engagement in knowledge integration • Behavioural worlds, following from the way the situation is perceived and roles are set, show “model I” characteristics which impede open and constructive dialogue and negotiation involved in competence integration.

13. Conclusions • Knowledge integration is hampered not only by differences of understanding but also by how people perceive the situation and the social context • Institutionalized ideas about market relationships create conditions inhibiting knowledge integration • In order to overcome these conditions alternative understandings of the situation and the social context need to be actively created

14. Findings • Outsourcing situationen domineras av osäkerhet, komplexitet – både i uppgiften och socialt • En sådan situation innehåller många moment och frågeställningar som skulle tjäna på ett gemensamt reflektivt agerande • Istället kommer den sociala ”osäkerheten” att leda till att en ”experthållning” och ett ”model 1-agerande” kommer att dominera – vilket motverkar reflektiva processer och lärande • Svårigheter att mötas över appreciative systems • Passiviserande roller med ”färdiga ursäkter” präglar tankefigurer • ”pragmatisk hållning”, undvika negativa känslor, inte pröva egna antaganden med verkligheten…