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«Innovating or Doing as Told? Status Differences and Overlapping Boundaries in Offshore Collaboration by Natalia Levina New York University Stern ...»

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Innovating or Doing as Told?

Status Differences and Overlapping Boundaries

in Offshore Collaboration

by

Natalia Levina

New York University

Stern School of Business

Information Systems Group/ IOMS

44 West Fourth St, Suite 8-78 (KMC)

New York, NY 10012

Office Phone: 212-998-0850

Email: nlevina@stern.nyu.edu

And

Emmanuelle Vaast

Long Island University

School of Business, Public Administration and Information Sciences

1 University Plaza—H700

Brooklyn, NY 11201

Office Phone: 917-306-5348 Fax: 718-488-1125 E-mail: emmanuelle.vaast@liu.edu This is a draft version of the paper that subsequently appeared with some modification in print.

Please cite as: Levina N. and E. Vaast, “Innovating or Doing as Told? Status Differences and Overlapping Boundaries in Offshore Collaboration,” MIS Quarterly (32:2), June, 2008, pp. 307Innovating or Doing as Told?

Status Differences and Overlapping Boundaries in Offshore Collaboration Acknowledgement: This work was sponsored in part by Alfred P. Sloan Industry Studies Fellowship and by the Center for Digital Economy Research at the New York University, Stern School of Business. We would also like to thank research seminar participants at the New York University, University of Maryland, Carnegie Mellon University, and HEC-Montreal for their helpful feedback. We are also grateful to the constructive comments on the paper we received from Kate Kaiser, the Associate Editor, three anonymous reviews, and Nils Fonstad as well as Atreyi Kankanhalli, who served as a discussant at the ICIS 2006 session where an earlier version of this paper won the Best Paper in Track award. Special thanks go to Patrick Parnaby, who helped us with editing. We are also deeply grateful to the research study participants spanning multiple organizations and continents.

Natalia Levina is an Associate Professor in the Information, Operations, and Management Sciences Department at the New York University Stern School of Business. Her research is focused on understanding how people collaborate across professional, organizational, and national boundaries on outsourced projects. She published in MIS Quarterly, Information Systems Research, Organization Science, Journal of MIS, and other outlets. She earned her Ph.D. in Information Technology from the Massachusetts Institute of Technology and her Master’s and Bachelor’s degrees from Boston University. She serves as an associated editor for ISR. She received the Alfred P. Sloan Industry Studies Fellowship to work on offshoring.

Emmanuelle Vaast is an Assistant Professor in Management of Information Systems at the School of Business, Public Administration and Information Sciences, Long Island University.

Her research interests deal with situated learning and the construction of intra-organizational boundaries and with the relationships between representations and practices in the context of IS use. Her work appeared in MIS Quarterly, Organization Science, Organization Studies, Information and Organization, Journal of MIS, and other outlets. She earned her Ph.D. in Management of Information Systems from the Ecole Polytechnique, Paris, France and is a former student of the Ecole Normale Supérieure and Sciences Po.

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Increasingly, firms source more complex and strategic as well as harder to codify IT projects to low cost offshore locations. Completing such projects successfully requires close collaboration among all participants. Yet, achieving such collaboration is extremely difficult because of the complexity of the context – multiple and overlapping boundaries associated with diverse organizational and national contexts separate the participants. These boundaries also lead to a pronounced imbalance of resources among onshore and offshore participants giving rise to status differences and inhibiting collaboration. This research adopts a practice perspective to investigate how differences in country and organizational contexts give rise to boundaries and associated status differences in offshore application development projects and how these boundaries and status differences can be renegotiated in practice to establish effective collaboration. To illustrate and refine the theory, a qualitative case study of a large financial services firm, which sourced a variety of “high-end” IT work to its wholly owned subsidiaries (“captive centers”) and to third party vendors in multiple global locations (e.g., India and Russia), is presented. Using a grounded theory approach, the paper finds that differences in country contexts gave rise to a number of boundaries that inhibited collaboration effectiveness, while differences in organizational contexts were largely mediated through organizational practices that treated vendor centers and captive units similarly. It also shows that some key onshore managers were able to alleviate status differences and facilitate effective collaboration across diverse country contexts by drawing on their position and resources. Implications are drawn for the theory and practice of global software development and multi-party collaboration.

Keywords: Offshore Software Development, Outsourcing, Collaboration, Qualitative Methods, Boundaries, Status, Power, Bourdieu, Practice Theory, Cross-cultural Teams, Distributed Teams, Virtual Teams, Middle Managers

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Companies are sourcing increasingly complex parts of their software development process to their own subsidiaries in low-cost countries (sometimes called “offshore captive units”) or to 3rd party offshore vendors (referred to as “offshore outsourcing”) (Stack and Downing 2005). Hightechnology firms like Microsoft, Yahoo!, Google, and IBM have moved parts of their strategic R&D activities to India, China, and Russia. An innovative software application like “Google Finance,” for example, was, for the most part, developed by Google’s Indian subsidiary (Anonymous 2006). Whether or not firms find actual cost savings in offshoring complex and poorly codifiable work has been the subject of intense debate (e.g., Pallatto 2005). Whatever the case may be, this practice is on the rise and firms are realizing that it requires an organizational capability to undertake multi-party collaboration spanning geographic and temporal distances as well as organizational, national, and professional boundaries (Couto et al. 2006).

Multi-party collaboration (“co-laboring”) occurs when parties with different practices, interests, and competences engage in joint work. However, because of complex internal and external dynamics, effective collaboration cannot be measured by objective outcomes alone (e.g.

whether the project was completed on time or on budget). Rather, Hardy’s et al. work defines effective collaboration as a process that (1) leverages the differences among participants to produce innovative, synergistic solutions and (2) balances divergent stakeholders’ concerns (2005, p. 58). This process is facilitated by the existence of shared identity and practices (Hardy et al. 2005; Levina and Vaast 2005) but is impeded by status differences among participants which inhibit open dialogue (Hoegl and Gemuenden 2001; Levina 2005; Metiu 2006). Social boundaries and physical distance separate participants on multi-party projects and make it difficult to establish shared identity and practices (Levina and Vaast 2005). Boundaries can also be used by participants as sources of distinction thus creating status inequalities (Levina 2005).

Effective collaboration is difficult to achieve in global offshoring projects as there are often multiple boundaries that must be bridged simultaneously (Espinosa et al. 2003; Hinds and Bailey 2003). Some of these boundaries have been studied separately in the past. For example, researchers looked at how cultural (Lam 1997; Krishna et al. 2004; Cramton and Hinds 2007), organizational (Lam 1997; Espinosa et al. 2003; Srikanth 2007), and functional (Espinosa et al.

2003; Birnholtz and Finholt 2007) boundaries each pose challenges to distributed teams. It remains to be seen, though, which of these or other boundaries become salient in affecting the collaboration and how different boundaries interrelate (Espinosa et al. 2003).

While, to date, researchers have tended to focus on physical distance (temporal or spatial) or institutionalized social boundaries (cultural, organizational, or functional), it has been argued that the most salient boundaries are often situated in the practices of collaborating parties (Walsham 2002; Cramton and Hinds 2007). It is well known that one of the key obstacles in achieving effective collaboration in distributed teams is the embeddedness of knowledge in local, situated practice and the resulting difficulty of establishing a common ground (Lam 1997; Cramton 2001;

Hinds and Mortensen 2004; Kumar et al. 2004; Metiu 2006). Research also shows that status differences arising from the context of collaboration itself (e.g., who owns the code) may become key impediments for effective collaboration (Metiu 2006).

Practice theory has shed much light on how obstacles for effective collaboration and related power relations emerge in organizations (Carlile 2004; Levina and Vaast 2005). Boundaries set agents apart on the basis of their practices and thus become salient or stop mattering as practices evolve (Bourdieu 1977). Status differences are seen as a result of differential access to resources, which, in turn, are produced or recognized as relevant or irrelevant through the everyday actions of actors (Bourdieu 1977). Thus, on the basis of practice theory we can address the following research questions: how do differences in country and organizational contexts give rise to boundaries and associated status differences in offshore software development projects, and how can boundaries and status differences be renegotiated in practice to establish effective collaboration? Drawing on Bourdieu’s writings we use an in-depth case study of one firm’s offshore Information Systems Development (ISD) projects to address these questions.

This paper is organized as follows. First, we introduce our theoretical perspective. Next follows the details about the case study method and the research site. Then, the findings section identifies and describes the salient boundaries, explores how specific boundaries gave rise to, and were reinforced by, status differences and discusses how certain actors helped alleviate these differences. The discussion section then expands our theoretical model on the basis of these findings. We conclude with the implications of our study for the theory and practice of global distributed teams and sourcing management.

BACKGROUND: BOUNDARIES AND STATUS DIFFERENCES IN

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Practice theory attributes the emergence, institutionalization, and transformation of sociostructural properties to the micro social interactions of people within the context of their everyday practices (Certeau 1984; Giddens 1984; Bourdieu and Wacquant 1992)1. Enacted structural properties constrain social activity, but they can also be transformed through agents’ actions. Status differences arise as agents do not share equal access to three fundamental types of capital (resources), including: economic capital (money, time, access to technology), intellectual2 capital (professional expertise, education, ownership of information), and social capital (networks of interpersonal relations which an agent can draw upon). There is also symbolic capital which refers to agents’ differential ability to classify any other resource as valuable (Bourdieu and Wacquant 1992).

Through their practices, agents are constantly engaged in shaping fields of practices as well as the boundaries that separate these fields. Boundaries delimit fields and arise from differences in practices that are differentially recognized and rewarded across fields (Levina and Vaast 2006).

Simultaneously, fields of practice emerge as constellations of agents who share unique sets of practices and interests while producing their own unique forms of capital (Bourdieu and Wacquant 1992). Agents within fields have different accumulations of relevant types of capital, and, hence, are divided into “haves” and “have-nots”—a distinction often differentiating newcomers from old-timers within a field. Fields of practice may become institutionalized, fragmented and/or overlap according to the changing practices of agents and the resources they acquire in the process (Abbott 1995). Thus, practices, boundaries, and fields are mutually constructing; none is given theoretical dominance (Silber 1995).

See Orlikowski (2000; 2002) for a more in-depth discussion on the relevance of practice theory for the organization and information systems fields. The scholars we cite have developed different theories based on the practice perspective, but all agree on its fundamental tenets.

According to Bourdieu, cultural capital refers to the ability to produce new representations of practice or information. In organizational theory, this kind of resource is typically termed “intellectual capital.” We will use this term to avoid the confusion between “cultural” capital of specific nations (Indian or US) and Bourdieu’s notion of cultural capital which can exist within societies, organizations, industries, professions, etc.

These fields are dynamic and their boundaries can be renegotiated in practice. In the context of ISD projects, the pre-existing differences in backgrounds of project participants will become more or less salient in producing status differences depending on the composition of the team and the context of work (Levina 2005). Moreover, because the practices surrounding the development of a new Information System (IS) can produce a unique distinction between agents who know and control the design and those who do not, the situated development effort may give rise to a new field and associated boundaries (Levina 2005; Levina and Vaast 2005).

Together, pre-existing and emergent fields and boundaries will unite agents on the basis of their joint interests and practices and set them apart when those differ.



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