Outsourcing, Competitive Capabilities and Performance: An Empirical Study in Service Firms

In analyzing the relationship between outsourcing and firm performance, different authors have studied the effects that outsourcing can have on the firm. Even if we establish an initial link between outsourcing and representative measurements of the results achieved through cost savings or the creation of greater market value, no author seems to have established a precise relationship between outsourcing and the most representative measures of company performance (organizational and business performance). After reviewing the literature on this issue, we believe that research has undervalued the impact that outsourcing decisions have on our competitive capabilities. After making an empirical study of service firms, this article finds that there is a relationship between outsourcing decisions and company performance which is articulated via the impact of outsourcing decisions on the firm's competitive capabilities.

[1]  Helen Lisbeth Walker,et al.  Outsourcing: assessing the risks and benefits for organisations, sectors and nations , 2005 .

[2]  B. Wernerfelt,et al.  A Resource-Based View of the Firm , 1984 .

[3]  A. Madhok.  Reassessing the fundamentals and beyond: Ronald Coase, the transaction cost and resource-based theories of the firm and the institutional structure of production , 2002 .

[4]  Roger L. Brown.  Assessing specific mediational effects in complex theoretical models , 1997 .

[5]  Rick Mullin,et al.  MANAGING THE OUTSOURCED ENTERPRISE , 1996 .

[6]  Anne M. Lillis,et al.  The impact of manufacturing flexibility on management control system design , 1995 .

[7]  A. Rasheed,et al.  Making More by Doing Less: An Analysis of Outsourcing and its Effects on Firm Performance , 2000 .

[8]  A. Neely.  The evolution of performance measurement research: Developments in the last decade and a research agenda for the next , 2005 .

[9]  Rob McLean,et al.  Alignment: Using the Balanced Scorecard to Create Corporate Synergies , 2006 .

[10]  C. Prahalad,et al.  The Core Competence of the Corporation , 1990 .

[11]  R. Coase.  The Nature of the Firm , 1937 .

[12]  Jeff K. Stratman.  Facilitating offshoring with enterprise technologies: Reducing operational friction in the governance and production of services , 2008 .

[13]  Fredrik Nordin.  Linkages between service sourcing decisions and competitive advantage: A review, propositions, and illustrating cases , 2008 .

[14]  A. Kakabadse,et al.  Critical review – Outsourcing: a paradigm shift , 2000 .

[15]  C. Lonsdale,et al.  The historical development of outsourcing: the latest fad? , 2000, Ind. Manag. Data Syst..

[16]  A. Roth,et al.  A taxonomy of manufacturing strategies , 1994 .

[17]  Alfred J. Nanni,et al.  The New Performance Challenge: Measuring Operations for World-Class Competition , 1990 .

[18]  Bin Jiang,et al.  Research on outsourcing results: current literature and future opportunities , 2006 .

[19]  Deepak K. Datta.  Organizational fit and acquisition performance: Effects of post-acquisition integration , 1991 .

[20]  Ronan McIvor,et al.  How the transaction cost and resource-based theories of the firm inform outsourcing evaluation , 2009 .

[21]  A. Satir,et al.  Strategic Sourcing: A Framework and a Case Study , 2000 .

[22]  R. Howell.  Covariance Structure Modeling and Measurement Issues: A Note on “Interrelations among a Channel Entity's Power Sources” , 1987 .

[23]  R. Kaplan,et al.  Alignment: Using the Balanced Scorecard to Create Corporate Synergies , 2006 .

[24]  Wendy L. Tate,et al.  Offshore outsourcing of services: An evolutionary perspective , 2009 .

[25]  O. I. Tukel,et al.  Outsourcing decision support: a survey of benefits, risks, and decision factors , 2006 .

[26]  M. Javidan,et al.  Core competence: What does it mean in practice? , 1998 .

[27]  Srinivas Kumar Pinjala,et al.  An empirical investigation on the relationship between business and maintenance strategies , 2006 .

[28]  Lars-Erik Gadde,et al.  The multiple boundaries of the firm , 2003 .

[29]  Wendy L. Tate,et al.  Offshore outsourcing of professional services: A transaction cost economics perspective , 2008 .

[30]  A. Kakabadse,et al.  Outsourcing: Current and future trends , 2005 .

[31]  J. Barney.  Resource-based theories of competitive advantage: A ten-year retrospective on the resource-based view , 2001 .

[32]  Khalid Hafeez,et al.  Core competence for sustainable competitive advantage: a structured methodology for identifying core competence , 2002, IEEE Trans. Engineering Management.

[33]  William M. Lankford,et al.  Outsourcing: a primer , 1999 .

[34]  Holger Görg,et al.  Does Outsourcing Increase Profitability? , 2004, SSRN Electronic Journal.

[35]  M. Antelo,et al.  Outsourcing or restructuring: The dynamic choice , 2010 .

[36]  Fukunari Kimura,et al.  Subcontracting and the Performance of Small and Medium Firms in Japan , 2002 .

[37]  J. Doh.  Offshore Outsourcing: Implications for International Business and Strategic Management Theory and Practice , 2005 .

[38]  G. Hamel,et al.  Competence-based competition , 1994 .

[39]  Lloyd A. Jobe,et al.  Balancing vertical integration and strategic outsourcing: effects on product portfolio, product success, and firm performance , 2006 .

[40]  Cipriano Forza,et al.  Survey research in operations management: a process‐based perspective , 2002 .

[41]  Ik Sun Lee,et al.  Single machine scheduling with outsourcing allowed , 2008 .

[42]  M. Frese,et al.  Innovation is not enough: climates for initiative and psychological safety, process innovations, and firm performance , 2003 .

[43]  Jacqueline L. Reck,et al.  Information Systems Outsourcing Announcements: Investigating the Impact on the Market Value of Contract-Granting Firms , 2000, J. Inf. Syst..

[44]  Deborah Compeau,et al.  Application of Social Cognitive Theory to Training for Computer Skills , 1995, Inf. Syst. Res..

[45]  Roger G. Schroeder,et al.  Perceptual measures of performance: Fact or fiction? , 2004 .

[46]  Bernd Görzig,et al.  Outsourcing and Firm-level Performance , 2002 .

[47]  Michael A. Hitt,et al.  Theory and research in strategic management: Swings of a pendulum , 1999 .

[48]  D. Teece,et al.  DYNAMIC CAPABILITIES AND STRATEGIC MANAGEMENT , 1997 .

[49]  J. Hair.  Multivariate data analysis , 1972 .

[50]  D. Elmuti,et al.  The effects of global outsourcing strategies on participants’ attitudes and organizational effectiveness , 2000 .

[51]  C. Fornell,et al.  Evaluating structural equation models with unobservable variables and measurement error. , 1981 .

[52]  Petter Gottschalk,et al.  Critical success factors from IT outsourcing theories: an empirical study , 2005, Ind. Manag. Data Syst..

[53]  D. A. Kenny,et al.  The moderator-mediator variable distinction in social psychological research: conceptual, strategic, and statistical considerations. , 1986, Journal of personality and social psychology.

[54]  J. B. Quinn,et al.  Intelligent Enterprise: A Knowledge and Service Based Paradigm for Industry , 1992 .

[55]  Julian Jones,et al.  The efficiency of accounting service provision , 2002, Bus. Process. Manag. J..

[56]  M. Hitt,et al.  Toward a Model of Strategic Outsourcing , 2007 .

[57]  G. Hult,et al.  Impact of Organizational and Contract Flexibility on Outsourcing Contracts , 1998 .

[58]  E. Penrose,et al.  The theory of the growth of the firm twenty-five years after , 1960 .

[59]  D. Otley.  Business performance measurement Theory and practice , 2003 .

[60]  Ashly Pinnington,et al.  How far is IS/IT outsourcing enabling new organizational structure and competences? , 1995 .

[61]  Mario Binder,et al.  Enterprise management: A new frontier for organisations , 2007 .

[62]  Gregory V. Frazier,et al.  Outsourcing effects on firms' operational performance: An empirical study , 2006 .

[63]  Margaret A. Peteraf,et al.  Published online in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/mde.1126 Unraveling The Resource-Based Tangle , 2022 .

[64]  J. Dhaliwal,et al.  An investigation of resource-based and institutional theoretic factors in technology adoption for operations and supply chain management , 2009 .

[65]  Ian Paul McCarthy,et al.  The impact of outsourcing on the transaction costs and boundaries of manufacturing , 2004 .