Outsourcing and financial performance: A negative curvilinear effect
Kotabe, Masaaki and Mol, Michael J.. (2009) Outsourcing and financial performance: A negative curvilinear effect. Journal of Purchasing & Supply Management, Vol.15 (No.4). pp. 205-213. ISSN 1478-4092
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Official URL: http://dx.doi.org/10.1016/j.pursup.2009.04.001
This study asks how a firm's degree of outsourcing across all activities influences financial performance. We argue there is an optimal degree of outsourcing, where firms outsource some activities yet integrate others, and that deviations lower performance in a negatively curvilinear fashion. We find empirical support, using 1995 and 1998 data on a sample of manufacturing businesses in the Netherlands, and show that the steepness of the curve increases under conditions of high uncertainty. We show the magnitude of the uncertainty effect on performance outcomes through a post hoc scenario analysis. Thus we provide a specific, theoretically and empirically grounded prediction of how outsourcing affects performance with implications for theory and practice.
|Item Type:||Journal Article|
|Subjects:||H Social Sciences > HD Industries. Land use. Labor|
|Divisions:||Faculty of Social Sciences > Warwick Business School|
|Library of Congress Subject Headings (LCSH):||Contracting out -- Netherlands, Business enterprises -- Finance, Vertical integration, Manufacturing industries -- Netherlands|
|Journal or Publication Title:||Journal of Purchasing & Supply Management|
|Official Date:||December 2009|
|Number of Pages:||9|
|Page Range:||pp. 205-213|
|Access rights to Published version:||Restricted or Subscription Access|
Abrahamson, E., and Rosenkopf, L. 1993. Institutional and competitive bandwagons: Using mathematical modeling as a tool to explore innovation diffusion. Academy of Management Review, 18(3): 487-517.
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