Proceedings of the 54th Hawaii International Conference on System Sciences | 2021 Implementing Global Business Services in a Plural Sourcing Context: Conceptualizing Modes of Service Governance Albert Plugge Shahrokh Nikou Delft University of Technology Åbo Akademi University & The Netherlands Stockholm University [email protected] [email protected] Abstract During the last decade firms decided to bundle in - house and outsourced business services and create To increase organizational responsiveness, firms flexibility to cater for changing internal circumstances. nowadays seek various approaches in delivering This approach resulted in a plural sourcing global shared business services. Today, global arrangement [7]. Today, plural sourcing is considered operating firms apply a plural sourcing model that to be the modus operandi of firms [8]. Literature consists of both in-house and outsourced business demonstrates multiple explanations for plural sourcing, services. As such, service governance is needed to ranging from safeguarding against vendor opportunism manage interdependencies between vendors, both in - [9] to complementarity of knowledge and incentives house and outsourced. However, as far as we know no [7]. In contrast to make-or-buy relationships, plural study has yet addressed how global business services sourcing arrangements create an inherent coordination are governed within the context of plural sourcing. We problem. Hence, service governance is needed to conducted 68 semi-structured interviews with executive manage interdependencies between vendors (e.g., in- management of international firms and distributed a house and outsourced). survey questionnaire to explore service governance As far as we know, no study, however, a ddressed modes. As a result, we identify five service governance how global business services are governed within the modes: regional, global, centralized, de-centralized context of plural sourcing. Aier et al. [10] argue that and multifunctional. Our paper contributes to research within the context of business services, service on global business services and plural sourcing by governance is still not well understood. The authors exploring various service governance modes. state that research in this field is required due to Theoretical and practical implications are discussed. network externalities, involvement of business departments, and diversity of stakeholders, as the Keywords: Business Services, Plural Sourcing, Service probability of inconsistent design and implementation Governance, Exploratory Research, Mini-Cases of business services will increase. Against the background of this call for more research, we suggest that service governance merit specific attention. This paper argues that firms may 1. Introduction differ in how global business services are implemented and as such, require various service governance modes. Due to the convergence of rapid business The aim of this research is to explore how firm s deal developments and challenges imposed by digitization with service governance of global business services of work processes, firms nowadays again seek various within the context of plural sourcing. Based on the approaches in delivering global shared business above discussion, following research question is services to achieve organizational responsiveness [1 - formulated: 2]. As such, shared services have become more popular What type of service governance modes are used as a service management option for globally operating by firms to implement global business services firms when delivering business services [3-5]. The when applying a plural sourcing strategy? focus of this paper is not on business-to-end-user services (consumers or other businesses), but on Taking explicitly firm service governance choices business services that are used to support firms’ into account, we answer the call of [11] for more internal business processes; for example, Finance a nd explorative research in the context of business services. Accounting (F&A), Human Resources (HR), Supply The authors argue that service sourcing and service Chain Management (SCM), Information Technology outsourcing are examples of broad topics with firm (IT) or Procurement [6]. relevance in need of scrutiny in marketing and business URI: https://hdl.handle.net/10125/71339 978-0-9981331-4-0 Page 5944 (CC BY-NC-ND 4.0) management (p 2460). By investigating the service collaboration within a plural-sourcing context is often governance in the context of plural sourcing, we problematic, because it is difficult to establish and contribute to literature by highlighting that process monitor control and coordination mechanisms [15]. excellence and aligning firms’ operating model are key rationales to implement global business services. 2.2. Plural sourcing Moreover, by identifying different service governance modes, we contribute to global business services, Plural sourcing research shows various definitions service governance and plural sourcing research. that address the combination of make, buy, and ally in This paper is organized as follows. Based on a a systematic way [7, 16]. We build on the definitions literature background, first, we address the concepts of of [17] and [18] and define plural sourcing as “the business services, plural sourcing, and service degree of simultaneous insourcing and outsourcing governance. By applying grounded theory as a (make-and-buy) the same business service activities by theoretical lens, we introduce the research a firm but differ from each other in their particular methodology, data collection and data analysis in capabilities and limitations”. Importantly, [18] a rgue Section 3. Next, we present our findings in Section 4. that the boundaries of ‘same’ are inconsistently defined In addition, based on the identified service governance across and even within papers. We follow the authors modes, we provide an embedded case studies to reconceptualization of ‘same’ as a spectrum of degrees elaborate on the findings. Discussions and the of ‘similarity’ and propose to study plural sourcing conclusion are presented in Section 5 and 6, tasks that are complementary in nature. respectively. The intuitively appealing assumption in the plural sourcing literature is that this concept ameliorates the 2. Literature review weaknesses of insourcing and outsourcing [19]. Or in 2.1. Business services other words, plural sourcing creates best of both worlds when providing GBS. Interdependencies between in - Previous studies show that a firm’s service strategy house and outsourced business services may influence is influenced by the availability and need for their the criticality of GBS and as such, the degree in which business services [11]. As argued by Wirtz et al. [5] a business service is viewed as a critical enabler of business services consist of a variety of services (e.g., business success [20]. Interdependencies increase the legal, accountancy, research and development, degree of plural sourcing complexity with a dditional information technology). To improve effectiveness, challenges, such as measuring end-to-end services, organizations decompose their enterprise and aligning contracts across providers, managing corresponding business services into smaller relationships and collaboration, and defining autonomous business components. As such, business standardization and modularization [21]. The services can be integrated and, or disintegrated to traditional conclusion that firms will prefer to integrate create enterprise ecosystem flexibility. Global Business complementary components now faces service Services (GBS) has been applied to a variety of models governance challenges as GBS functions are provided attempting to coordinate service delivery across by both in-house and outsourced vendors. multiple functions [1]. According to [12], GBS can be defined as an “integrated compilation of service 2.3. Service governance offerings for any (multiple) support functions within a company […] global in nature and with respect to both Literature on governance shows that some studies delivery centers and customers”. As a result, GBS focus on the importance of contractual governance models are different from the traditional a pproach of agreements to manage outsourcing arrangements [6]. shared services and the past wave of outsourcing Specifying long-term contracts is complex and /offshoring and seeks to leverage the capabilities of inherently incomplete because firms have to deal with vendors [1314]. uncertainty and unanticipated obligations. Hence, firms Market research shows that GBS models can be should govern an outsourcing arrangement beyond characterized by their ‘multi-nature’ [1], namely: traditional contractual agreements and a lso consider multi-function, multi-region, multi-business, and multi- relationships [22]. Literature suggests that contractual sourcing approach. Applying a multi-sourcing strategy governance and relational governance influence each fits with the concept of plural sourcing. To implement other and can be perceived as complementary [6]. a plural sourcing strategy, both a firm and its vendors More specifically, service governance corresponds to have to focus on collaboration as they have to work the responsibilities within a firm to manage business together intensively to exchange business service services. We build on the definition of [10] and define information. However, literature shows that Page 5945 service governance as “a firm’s overarching ca pacity [27].