Outsourcing and its implications for market success : negative curvilinearity, firm resources, and competition

Kotabe, Masaaki, Mol, Michael J., Murray, Janet Y. and Parente, Ronaldo (2011) Outsourcing and its implications for market success : negative curvilinearity, firm resources, and competition. Academy of Marketing Science. Journal . ISSN 0092-0703

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Abstract

Over the past few decades, outsourcing has become a widely discussed and researched means for firms to change their performance. In this article, we attempt to link outsourcing to the market success of firms, specifically their market share. We argue that although firms may be able to increase their market share through outsourcing, this is only true up to a point, beyond which market share actually decreases as a consequence of further outsourcing. There is, in other words, a negatively curvilinear (inverted U) relationship between outsourcing and market share. We also hypothesize that the outsourcing–market share relationship is moderated negatively by both the strength of firm resources and the extent of competition in a firm‘s market. We empirically confirm these arguments through a panel data analysis containing over 19,000 observations on manufacturing firms, and offer some case examples to illustrate the mechanisms driving these results. We discuss implications for marketing research 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, Market share
Journal or Publication Title:Academy of Marketing Science. Journal
Publisher:Springer New York LLC
ISSN:0092-0703
Date:July 2011
Status:Peer Reviewed
Access rights to Published version:Restricted or Subscription Access
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