Diffusing knowledge-based core competencies for leveraging innovation strategies: Modelling outsourcing to knowledge process organizations (KPOs) in pharmaceutical networks

Samir Gupta*, Arch Woodside, Chris Dubelaar, Don Bradmore

*Corresponding author for this work

Research output: Contribution to journalArticleResearchpeer-review

46 Citations (Scopus)

Abstract

As pharmaceutical firms try to market their products and reduce costs, vertically integrated structures hamper innovation processes. Yet, pharmaceutical firms must innovate to compete. Outsourcing knowledge intensive activities to knowledge process organizations (KPOs) serves to reduce innovation process obstacles. Grounded in diffusion theory and strategic management literature, this conceptual paper explores four interrelated strategic concepts: core competencies, economies of scale and scope, knowledge sharing, and learning. This paper claims that (a) accumulated core competencies of multinational pharmaceutical companies (MPCs) erode over time and these companies become dependent on KPOs (b) MPCs must understand how KPOs manage core competencies (c) economies of scope benefit KPOs enabling them to sustain competitive advantages for their MPC partners, meanwhile the benefits from economies of both scale and scope shift from MPCs to KPOs (d) KPOs need to monitor their rate of learning to remain competitive. The paper identifies implications for industrial managers and directions for future research.

Original languageEnglish
Pages (from-to)219-227
Number of pages9
JournalIndustrial Marketing Management
Volume38
Issue number2
DOIs
Publication statusPublished - Feb 2009
Externally publishedYes

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