Sage Journals: Discover world-class research

Abstract

Spinning off non-core functions into separate businesses has become increasingly prevalent as organisations restructure and specialise in core areas. A spin-off arrangement is often used as an alternative to outsourcing functions to an independent service provider. Although spin-offs have been increasing in prominence, there are few studies in the literature that provide detailed insights into development and implementation. This paper focuses on a privatised utility company that spun off a number of functions into a separate commercial business. As well as developing a new client base, the spin-off continued to provide services to the utility company. Although this arrangement was regarded as extremely successful, the development and implementation of the spin-off arrangement faced a number of difficulties. This paper considers the arrangement right from idea generation through to full development and eventual disposal. The development of the spin-off was considered along with the implications for the subsidiaries in the utility company. The paper provides a number of important lessons for organisations pursuing this type of outsourcing configuration.

Get full access to this article

View all access options for this article.

References

Adler

(2003), ‘Making the HR Outsourcing Decision’, Sloan Management Review, Vol. 45, No. 1, Fall, pp. 53–60.

Barney

J. B.

(1991), ‘Firm Resources and Sustained Competitive Advantage’, Journal of Management, Vol. 17, No. 1, pp. 99–120.

Bryce

D. J.

and Usseem

(1998), ‘The Impact of Corporate Outsourcing on Company Value’, The European Management Journal, Vol. 16, No. 6, pp. 635–643.

Eisenhardt

(1989), ‘Building Theories from Case Study Research’, Academy of Management Review, No. 14 Vol. 4, pp. 532–550.

Hagel

and Singer

(1999), ‘Unbundling the Corporation’, Harvard Business Review, Vol. 77, No. 2, pp. 133–142.

Hamel

and Prahalad

C. K.

(1994), Competing for the Future, Boston: Harvard Business Press.

Hammer

(2002), ‘Process Management and the Future of Six Sigma’, Sloan Management Review, Winter, pp. 26–32.

Insinga

R. C.

and Werle

M. J.

(2000), ‘Linking Outsourcing to Business Strategy’, Academy of Management Executive, Vol. 14, No. 4, pp. 58–70.

Kakabadse

and Kakabadse

(2000), ‘Critical Review Outsourcing: A Paradigm Shift’, The Journal of Management Development, Vol. 19, No. 8, pp. 670–728.

10.

Lacity

and Willcocks

(2001), Global Information Technology Outsourcing, Chichester: John Wiley and Sons.

11.

Lacity

Willcocks

and Feeny

(2004), ‘Commercialising the Back Office at Lloyds of London: Outsourcing and Strategic Partnerships Revisited’, European Management Journal, Vol. 22, No. 2, pp. 127–140.

12.

Mack

and Quick

(2002) ‘EDS: An Inside View of a Corporate Life Cycle Transition’, Organizational Dynamics, Vol. 30, No. 3, pp. 282–293.

13.

McIvor

(2005), The Outsourcing Process: Strategies for Evaluation and Management, Cambridge: Cambridge University Press.

14.

Modernising Government (1999), London: HMSO.

15.

Moncada-Paterno-Castello

Tübke

Howells

and Carbone

(1999), ‘The Impact of Corporate Spin-offs on Competitiveness and Employment in the European Union’, IPTS Technical Report Series, European Commission, December.

16.

Pettigrew et al. (2003), Innovative Forms of Organizing, London: Sage.

17.

Sako

(2005) ‘Governing Automotive Supplier Parks: Leveraging the Benefits of Outsourcing and Co-location?’ Paper presented at The DRUID Tenth Anniversary Summer Conference on Dynamics of Industry and Innovation: Organizations, Networks and Systems, Copenhagen Business School, Copenhagen, Denmark, June 27–29, 2005.

18.

Sako

(2006), ‘Outsourcing and Offshoring: Implications for Productivity of Business Services’, Oxford Review of Economic Policy, Vol. 22, No. 4, pp. 499–512.

19.

Sako

and Tierney

(2005), Sustainability of Business Service Outsourcing: The Case of Human Resource Outsourcing (HRO), AIM Research Working Paper Series, 19th June, ISSN: 1744–0009.

20.

Van der Vegt

, Emans

and Van der Vliert

(1998), ‘Motivating Effects of Task and Outcome Interdependence in Work Teams’, Group and Organization Management, Vol. 23, No. 2, pp. 124–143.

21.

Williamson

O. E.

(1985), The Economic Institutions of Capitalism: Firms, Markets and Relational Contracting, New York: Free Press.

22.

Williamson

O. E.

(1975), Markets and Hierarchies, New York: Free Press.

23.

Yin

(1994), Case Study Research: Design and Methods, 2nd Edition, California: Sage.

Outsourcing and the Spin-off Arrangement: Lessons from a Utility Company

Abstract

Get full access to this article

References