Mol, Michael J. and Kotabe, Masaaki (2011) Overcoming inertia : drivers of the outsourcing process. Long Range Planning, Vol.44 (No.3). pp. 160-178. doi:10.1016/j.lrp.2010.12.002

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Abstract

Almost all managers have directly or indirectly been involved in the practice of outsourcing in recent years. But as they know, outsourcing is not straightforward. Outsourcing inertia, when companies are slow to adapt to changing circumstances that accommodate higher outsourcing levels, may undermine a firm’s performance. This article investigates the presence of outsourcing inertia and the factors that help managers overcome it. Using statistical evidence, we show that positive performance effects related to outsourcing can accumulate when circumstances change. This is then followed by rapid increases in outsourcing levels (i.e. outsourcing processes). We investigate what gives rise to these outsourcing processes through follow-up interviews with sourcing executives, which suggest five drivers behind outsourcing processes: managerial initiative (using outside experience); hierarchy (foreign headquarters); imitation (of competitors and of similar firms); outsider advice (from external institutions); knowledge sources (using external information). These five drivers all offer scope for managerial action. We tie them to academic literatures and suggest ways of investigating their presence and impact on the outsourcing process. Overall, we conclude that while economizing factors play a key role in explaining how much firms outsource, it is socializing factors that tend to drive outsourcing processes.

Item Type:	Journal Article
Subjects:	H Social Sciences > HD Industries. Land use. Labor
Divisions:	Faculty of Social Sciences > Warwick Business School > Marketing & Strategic Management Faculty of Social Sciences > Warwick Business School
Library of Congress Subject Headings (LCSH):	Contracting out
Journal or Publication Title:	Long Range Planning
Publisher:	Elsevier Ltd.
ISSN:	0024-6301
Official Date:	June 2011
Dates:	Date Event June 2011 Submitted
Volume:	Vol.44
Number:	No.3
Page Range:	pp. 160-178
DOI:	10.1016/j.lrp.2010.12.002
Status:	Peer Reviewed
Publication Status:	Published
Access rights to Published version:	Open Access

Data sourced from Thomson Reuters' Web of Knowledge

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