Examining the link between outsourcing and performance: the leverage effect of the interactive use of management accounting and control systems

Abstract

Previous literature reveals contradictory results when evaluating the effect of outsourcing on organisational performance. In attempting to explain this contradiction, the existing research seems to have overlooked potential intermediate variables such as management accounting and control systems (MACS). Because an inadequate control of supplier relationships can impair the performance of outsourcing operations, there is a need to adopt management tools to build and improve these relationships. MACS comprise the various policies and procedures used to ensure that the suppliers’ behaviour and decisions are consistent with outsourcing objectives. The interactive use of these management tools can help effectively manage the relationship between the outsourcing organisation and the outsourcer.

Taking a sample of 231 organisations, the results obtained support the research question, suggesting that interactive use of MACS moderates the impact of some outsourced activities on performance.

Keywords:

• management accounting and control systems
• outsourcing
• organisational performance
• interactive use

JEL classification:

• M41
• M11

Acknowledgements

The author gratefully acknowledges the helpful comments received on earlier versions of this paper from Ernesto López-Valeiras, Beatriz González Sánchez, Elisa Breuer, Beatriz Garcia Osma and especially to two anonymous reviewers and David Naranjo Gil (Associate Editor) for their constructive feedback.

ORCID

Jacobo Gómez-Conde http://orcid.org/0000-0002-0907-3471

Notes

1. Purchasing parts or components for the final product; management services; distribution and/or sales of products or services; manufacturing of components for the final product; product design; engineering; and the research process.

2. Based on Simons, negative controls are not interpreted as bad controls. “The dual role of controls should not be confused with the quality of a control, the latter being an assessment of whether a control is good or bad, rather than a description of the different roles a control can play” (Tessier & Otley, 2012, p. 173).

3. Sistema Anual de Balances Ibéricos (SABI) database. The SABI data include information on book records and descriptive information about firms, including size, ownership structure and a complete set of financial ratios.

4. Questionnaires were sent in February 2011 (first round). The final round was sent in May 2011.

5. For N = 5,814; Z = 1.96 (significance level 0.95); p = 0.5; q = 0.5; e = 0.063 gives a minimum sample (n) of 231 companies. Where: n is sample size; N is population; Z is significance level; p is positive variability; q is negative variability; e is allowable error.

6. Market performance → Financial performance (β = 0.575, t = 11.228, p < 0.01); Innovative performance → Financial performance (β = 0.072, t = 1.339, p < 0.10); R² for Financial performance = 0.363.

Additional information

Funding

The author is also grateful to Catedra AECA Carlos Cubillo (2013–2014) and the Spanish Ministry of Education and Science [ECO2013-48328-C3-2-P] for financial support.