Outsourcing of Strategic Resources and Capabilities: Opposing Choices in the Commercial Aircraft Manufacturing

Abstract

According to the Resource-Based View, strategic resources and capabilities should be kept within the company because they are a source of competitive advantage. Using the VRIO model which constitute a part of resource based perspectives, aircraft flight controls represent an example of strategic resources and capabilities. Whereas Airbus has chosen to insource the design and manufacture of this system, Boeing has chosen to outsource it. This article is a preliminary part of a comprehensive effort to understand the underlying reasons for the diverging strategic choices made by these companies in defining their boundaries in the last two decades. We show that, through insourcing, Airbus has opted for long-term control of what is a critical component and seeks to extend and enrich its knowledge as shown by patent analysis. Boeing’s strategy of shareholder value management, which mainly favors immediate financial performance, helps to explain the choice of outsourcing in order to reduce the cost of designing and producing flight controls. It thus appears necessary to go beyond resource-based views in order to analyze choices relating to outsourcing