Trust and Knowledge in the Outsourcing Relationships. The Rise of the Virtual Company

Abstract

Today's fast changing environment, characterised by the increasing importance of flexibility, knowledge and performance, forces corporations to rethink their organisation, how they have traditionally structured their production and their relations with markets and suppliers. To reduce costs, remain flexible and technologically competent companies have increasingly come to rely upon other corporations, whose core competencies are expertise in each specific business. Outsourcing is rapidly growing in all business functions because of its benefits, but it may also imply several risks for the enterprise. Within outsourcing operations and their management, the role of knowledge and trust is critical, especially with the growth of strategic outsourcing. Therefore the article focuses on the concept of trust, trying to analyse its roots and its implications as a source of competitive advantage. As companies outsource more and more activities they could evolve into a network of independent businesses working together. So, the concept of virtual enterprise according to the diverse interpretations of virtuality (functional organisational and operational virtuality) and the basic factors for their success is analysed. The virtual company can create a synergism by the combination of core competence between the participants, but it must rely on open communication and total trust.

Keywords: Outsourcing, virtual company, trust, knowledge

JEL Classification: M10