The influence of capability considerations on the outsourcing decision: the case of a manufacturing company

The study of outsourcing has been influenced by a number of theories from a range of disciplines including industrial economics, business strategy, and management accounting. In particular, the resource-based theory of the firm has been increasing in prominence in outsourcing as companies pursue competence-based strategies to achieve competitive advantage. This paper assesses the utility of the resource-based theory as a theoretical lens to understand the outsourcing decision in a manufacturing context. A prescriptive outsourcing framework is presented which was developed from the resource-based theory and carrying out in-depth case study research in a manufacturing company. The findings illustrate that the framework provides a useful basis for practical prescription in a manufacturing environment. However, the research reveals a number of the limitations of the framework, including the need to consider more fully the implications of supply market conditions on outsourcing decisions.

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