Overcoming Inertia: Drivers of the Outsourcing Process

Michael J. Mol*, Masaaki Kotabe

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

20 Citations (Scopus)

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 economising factors play a key role in explaining how much firms outsource, it is socialising factors that tend to drive outsourcing processes.

Original languageEnglish
Pages (from-to)160-178
Number of pages19
JournalLong Range Planning
Volume44
Issue number3
DOIs
Publication statusPublished - 2011 Jun
Externally publishedYes

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Finance
  • Strategy and Management

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