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EMAC 2024 Annual


When Should Organizations Outsource Problem Solving? Balancing Functional and Technical Requirement Specifications in Public Procurement
(A2024-119671)

Published: May 28, 2024

AUTHORS

Anna Stepanova, BI Norwegian Business School; Jon Sande, BI Norwegian Business School; Kenneth Wathne, University of Stavanger

ABSTRACT

This paper explores how organizations strategically use different requirement specifications in procurement projects to create value. Whereas technical requirement specifications describe the actual solution and/or the framework in which the solution should fit functional requirement specifications describe the problem that the buyer seeks to solve and the buyer’s underlying goals and needs. By employing a multimethod approach, the authors develop a conceptual foundation and provide empirical evidence of the role of requirement specifications in the decision to outsource or integrate complex problem-solving. Relying on survey data on 258 public procurement projects, the paper reveals a U-shaped relationship between problem complexity and functional requirement specifications, moderated by transaction size and procurer’s category experience. This paper offers a novel perspective on optimizing problem-solving processes.