SMEs De- or Re-Organising knowledge when outsourcing?

Book chapter, 2013

A growing number of Danish manufacturing companies feel compelled to offshore greater or smaller parts of their organisation. Drawing on organisational theory and, the concept of knowledge governance, this paper examines two SMEs in the textile and the furniture sector, highlighting the knowledge-management intersection. The two case studies show one SME reorganising its processes and integrating knowledge through a mainly captive knowledge governance set-up; the other deorganises, disintegrates and, to a certain extent, “compensates” with virtual organisational elements: exercising knowledge governance through IT systems as well as through the establishment of an offshored physical intermediary control element. Furthermore, both case companies work with so-called soft knowledge governance approaches, in one case through the introduction of CSR in the new captive setup, and in the other case through the specific selection of new suppliers and their capability/competence building over time. Organisation design approaches would focus on the initial diagnosis, choice and implementation of a “new” organisation. However, the organisations studied, experience emergent organisational design elements over time. Furthermore, they are involved in dynamically tackling the learning of the organisational players as well as the dynamics of their relationships with cooperating partners regarding maintaining and developing their innovation capability. To manage these challenges, both case companies choose to revisit the organisational design elements and reconfigure their organisational design set-up, indicating a need to reinstate the classic design components along with a more dynamic perspective.