Outsourced benefits are positive effects of a financial transaction that benefit a third party or the world at large. They are a type of positive externality, which companies may try to create to be seen as socially responsible. Intellectual property and network externalities are examples of outsourced benefits. Measuring positive and negative externalities is becoming more important in evaluating a company’s contribution to society.
Outsourced benefits are benefits that arise from a financial transaction or business decision. These advantages, however, do not directly invent any of the parties involved in the transaction; rather, they benefit a third party, or the world at large. A classic example of an outsourced benefit is found in the beekeeping industry, where the beekeeper’s bees help pollinate plants and trees, which benefits the surrounding community.
The often unintended repercussions of a financial transaction that impact people outside of that transaction are collectively known as an externality. Many people divide externalities into the rough categories of negative externalities and positive externalities. Negative externalities are things that harm people outside of the transaction, with industrial pollution being a well-known example of a negative externality. Positive externalities, also known as externalized benefits, are externalities that are considered positive or positive.
Since outsourced benefits have a positive effect, some companies actually work to create outsourced benefits so that they are seen as more socially responsible, especially when consumers started clamoring for more environmentally friendly business models in the late 20th century . Commonly, however, outsourced benefits are simply events that occurred that could not have been foreseen.
Intellectual property such as inventions often result in outsourced benefits, as people explore the invention and rearrange it or come up with refinements. Sometimes, people who are completely new to an invention can be discovered by people who weren’t involved in the original process, and many companies really put a lot of energy and money into trying to get those outsourced benefits.
In another form of advantage externally known as a network externality, so many people adopt a new technology that the technology becomes widely accepted, leading to widespread benefits for technology users and others. For example, when the first fax machines were introduced, they were expensive and cumbersome to use, but as more and more consumers bought them, the fax network expanded, and companies responded by developing better technology at lower cost, making it available to everyone. .
A growing interest in externalities has led to widespread attempts to track and measure positive and negative externalities when considering a firm’s overall contribution to the marketplace and the world. Companies that involve a large number of negative externalities, for example, may be considered harmful to society, while companies that generate externalized benefits are considered generally positive additions to society.
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