The supplier's side of outsourcing: Taking over activities and blurring organizational boundaries

•The paper identifies key dimensions of outsourcing based on a relational perspective and from the supplier’s point of view.•Outsourcing relationships entail value co-creation via seller-buyer coordination instead of externalized activities.•Mutual dependence emerges between the supplier and the customer due to the supplier taking over activities.•Mutual dependence is followed by the blurring of organizational boundaries.

Since most of the literature on outsourcing focuses only to the buying (outsourcing) company, this paper aims to highlight the supplier's side from a relational perspective. The paper stresses the importance of business relationships between suppliers of outsourced activities and their customers. The paper's purpose is specified in two research questions: (1) how is value created within outsourcing and (2) how does the supplier interact with the outsourcing company? Our method relies on an in-depth qualitative case study of Logoplaste, a Portuguese packaging company which supplies large consumer goods manufacturers through complex outsourcing activities. Our analysis identifies three key dimensions of outsourcing relationships: (1) value co-creation via inter-firm coordination (as opposed to unilateral externalization of activities); (2) mutual dependence between supplier and customer due to the supplier's taking over activities; and (3) the blurring of organizational boundaries because of mutual dependence. These dimensions manifest themselves, even though in different degrees, after the initiation of any outsourcing relationship: these variables are new to the literature on outsourcing, which focuses on the ex ante dimensions that influence the customer's pre-relational choices such as “make or buy” and relationship type.