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Outsourcing, performance, and the role of e-commerce : a dynamic perspective

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Kotabe, Masaaki, Mol, Michael J. and Murray, Janet Y.. (2008) Outsourcing, performance, and the role of e-commerce : a dynamic perspective. Industrial Marketing Management, Vol.37 (No.1). pp. 37-45. ISSN 0019-8501

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Official URL: http://dx.doi.org/10.1016/j.indmarman.2007.06.011

Abstract

In a highly competitive global environment, many manufacturers respond by setting up outsourcing relations for components and finished products with lower-cost producers on a contractual OEM (original equipment manufacture) basis. In the last decade, we have witnessed a spectacular growth in outsourcing activities led primarily by U.S. and Japanese companies, although their approaches to outsourcing strategy and supplier relations are different. However, outsourcing strategy is not without drawbacks. We offer a dynamic perspective of outsourcing strategy and its performance implications, in which we argue that there is an optimal degree of outsourcing. The outsourcing-performance relationship takes on an inverted-U shape, implying that as firms deviate further from their optimum degree of outsourcing, by either insourcing or outsourcing too much, their performance will suffer disproportionately. We then discuss how e-commerce affects where the optimum point of any particular firm is located, hence explicitly linking developments in e-commerce to changing outsourcing levels. We provide implications for the practice and study of outsourcing and e-commerce.

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, Electronic commerce, Business logistics

Journal or Publication Title:

Industrial Marketing Management

Publisher:

Elsevier Inc.

ISSN:

0019-8501

Official Date:

January 2008

Dates:

Date	Event
January 2008	Published

Volume:

Vol.37

Number:

No.1

Number of Pages:

Page Range:

pp. 37-45

Identification Number:

10.1016/j.indmarman.2007.06.011

Status:

Peer Reviewed

Publication Status:

Published

Access rights to Published version:

Open Access

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