[Paper Review] Business Mereology: Imaginative Definitions of Insourcing and Outsourcing Transformations

J.A. Bergstra, S.F.M. van Vlijmen|arXiv (Cornell University)|Dec 28, 2010

Outsourcing and Supply Chain Management18 references3 citations

TL;DR

This paper introduces 'business mereology'—a formal framework based on mereological principles (theory of parts and wholes) to define and analyze outsourcing and insourcing as structural transformations in organizations. It proposes imaginative, abstract definitions of unit-to-unit outsourcing and insourcing as part of a broader theory of sourcing, emphasizing part-whole relations, concurrency, and state transformations, with applications to complex, multi-party sourcing scenarios.

ABSTRACT

Outsourcing, the passing on of tasks by organizations to other organizations, often including the personnel and means to perform these tasks, has become an important IT-business strategy over the past decades. We investigate imaginative definitions for outsourcing relations and outsourcing transformations. Abstract models of an extreme and unrealistic simplicity are considered in order to investigate possible definitions of outsourcing. Rather than covering all relevant practical cases an imaginative definition of a concept provides obvious cases of its instantiation from which more refined or liberal definitions may be derived. A definition of outsourcing induces to a complementary definition of insourcing. Outsourcing and insourcing have more complex variations in which multiple parties are involved. All of these terms both refer to state transformations and to state descriptions pertaining to the state obtained after such transformations. We make an attempt to disambiguate the terminology in that respect and we make an attempt to characterize the general concept of sourcing which captures some representative cases. Because mereology is the most general theory of parthood relations we coin business mereology as the general theory in business studies which concerns the full variety of sourcing relations and transformations.

Motivation & Objective

• To develop a formal, imaginative definition of outsourcing and insourcing as structural transformations in organizations, grounded in mereology.
• To clarify the ambiguous and overlapping terminology in sourcing by distinguishing between state descriptions and state transformations.
• To establish a theoretical foundation—business mereology—for understanding sourcing relations beyond IT, including multi-party and concurrent transformations.
• To model concurrent activity and interaction between units during sourcing transitions using formal concurrency models.
• To lay the groundwork for future analysis of interference, legal processes, strategic partnerships, and network evolution in sourcing ecosystems.

Proposed method

• Uses mereology as the foundational theory to model part-whole relationships in organizational units undergoing sourcing transformations.
• Applies 'imaginative definitions'—clear, idealized cases of outsourcing/insourcing that serve as starting points for more nuanced definitions.
• Models concurrent unit activity using thread algebra, representing units as sequential programs whose behaviors are interleaved.
• Defines sourcing transformations as state transitions, distinguishing between the process (transformation) and the resulting state (description).
• Introduces a global state space to formalize data and artifact flows between units during outsourcing.
• Proposes a framework for analyzing multiple, concurrent outsourcing/insourcing progressions in complex organizations.

Experimental results

Research questions

• RQ1 How can outsourcing and insourcing be formally defined as structural transformations using mereological principles?
• RQ2 What distinguishes the transformation (process) of sourcing from the resulting state description of an organization?
• RQ3 How can concurrent activity of multiple insourcing and outsourcing units be modeled formally?
• RQ4 In what ways do part-whole relations in organizations constrain or enable sourcing decisions and transformations?
• RQ5 How might legal, strategic, and operational complexities be integrated into a formal definition of sourcing?

Key findings

• The paper establishes 'business mereology' as a general theoretical framework for analyzing sourcing relations through part-whole dynamics.
• Outsourcing and insourcing are defined as transformations that reconfigure organizational units by transferring parts (activities, personnel, assets) between them.
• The framework distinguishes between the transformation process and the resulting organizational state, enabling clearer terminology and analysis.
• Concurrency of multiple sourcing progressions is modeled using thread algebra, allowing for strategic interleaving of unit behaviors.
• The approach enables the identification of 'outsourcing progressions' as identifiable sequences of structural changes in organizational units.
• The model supports future analysis of interference between concurrent sourcing transformations and evolution of sourcing networks.