Operations flexibility and outsourcing benefits: an empirical study in service firms

Abstract

Outsourcing is a widely extended practice for many industries competing at the global level. Through outsourcing, firms are able to clearly define their core field of activities while transferring non-core activities to organizations enabled to perform them with higher degrees of efficiency. However, outsourcing is not exempted from some risks, especially those derived from process coordination, information sharing, or oportunistic behaviours. Operations flexibility can play a fundamental role in moderating these risks while increasing the benefits from outsourcing by decreasing the level of dependence on the outsourced activities. In this paper, a structural analysis is performed to analyse the relationship between operations flexibility and outsourcing benefits in service firms. Results show that higher levels of flexibility in the informations systems, markets, expansion, and personnel dimensions are directly related to higher outsourcing benefits.

Keywords:

• outsourcing
• strategic decisions
• operations management
• flexibility

Notes

Servuction is a term first introduced by Langeard, Bateson, Lovelock, and Eiglier (1981), which refers to the production of services.