In today’s business environment, companies are driven to conduct a few functions inhouse and to obtain the rest from other sources through aggressive outsourcing. Recently, many firms have outsourced their customer relationship management (CRM) tools or systems (e.g. CRM programs, loyalty programs, and sales management) to consulting firms and other system developers. While CRM outsourcing may seem attractive at the management level considering investment cost and expertise, serious hazards are often encountered when they face serious losses in organizational learning for their markets and customers. This study contributes to marketing research by examining the importance of providing information concerning the impact of management’s strategic decisions, such as the decision to outsource marketing functions. Additionally, the current study complements and extends extant outsourcing and organizational learning research aimed at identifying the underlying determinant of outsourcing, examining the relationship between outsourcing and the marketing learning process, and exploring the outcomes of an effective marketing learning process. Keywords: organizational learning; marketing capability; outsourcing; customer relationship management Despite the increasing interest in organizational learning (hereafter OL), there is still some vagueness surrounding several fundamental issues, including the proper conceptualization and measurement of OL, outcomes of effective learning, facilitators of OL and learning loss, or barriers to learning (Baker & Sinkula, 1999; Day, 2002; Huber, 1991; Moorman, 1995; Moorman & Miner, 1997; Rindfleisch & Moorman, 2001; Sinkula, 2002). Research on facilitators of learning has drawn the most significant amount of attention from researchers; in comparison, relatively little attention has been paid to obstacles to OL. In particular, no research to date has empirically tested a learning framework that highlights learning barrier factors that diminish the organizational learning process (hereafter OLP). In recent years, an increasing amount of attention has been paid to outsourcing of marketing functions in organizations. A major influence impacting outsourcing decision making is consideration of scale and costs (Finlay & King, 1999). McFarlan and Nolan (1995) argued that the major drivers for outsourcing were primarily cost-effective access

“PROGRESS in IS” encompasses the various areas of Information Systems in theory and practice, presenting cutting-edge advances in the field. It is aimed especially at researchers, doctoral students, and advanced practitioners. The series features both research monographs that make substantial contributions to our state of knowledge and handbooks and other edited volumes, in which a team of experts is organized by one or more leading authorities to write individual chapters on various aspects of the topic. “PROGRESS in IS” is edited by a global team of leading IS experts. The editorial board expressly welcomes new members to this group. Individual volumes in this series are supported by a minimum of two members of the editorial board, and a code of conduct mandatory for all members of the board ensures the quality and cutting-edge nature of the titles published under this series. More information about this series at http://www.springer.com/series/10440

ARTICLE INFO Keywords: Outsourcing Second-order marketing competences First-order marketing competences Absorptive capacity Organizational learning Dynamic capabilities

ABSTRACT

Marketing outsourcing has been increasing for decades due to its well-known benefits, even though the development of dynamic marketing capabilities can be severely damaged as a result. This study focuses on the conditions under which marketing outsourcing favors organizational learning. We found that the relationship between marketing outsourcing and second-order marketing competences resembles an inverted U curve. The first-order marketing competences and absorptive capacity positively moderate this relationship both individually and jointly, by shifting the U-curve to the right. Thus, any firm has an optimum level of beneficial outsourcing that depends on how skilled it is in the outsourced marketing function and its ability to assimilate and apply new knowledge. Our findings provide learning-related criteria for the outsourcing decision. Firms that will consider them can develop a knowledge-based competitive advantage while still enjoying the benefits of outsourcing. Against the common wisdom, we show that the development of new marketing capabilities is an equally challenging task for marketing functions with both low and high knowledge intensity