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Does Outsourcing Really Improve Firm Performance? Empirical Evidence and Research Agenda
Author(s) -
Lahiri Somnath
Publication year - 2016
Publication title -
international journal of management reviews
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.475
H-Index - 107
eISSN - 1468-2370
pISSN - 1460-8545
DOI - 10.1111/ijmr.12075
Subject(s) - outsourcing , context (archaeology) , scope (computer science) , business , empirical research , knowledge process outsourcing , industrial organization , empirical evidence , marketing , phenomenon , work (physics) , economics , public relations , political science , paleontology , philosophy , physics , epistemology , quantum mechanics , computer science , biology , programming language , mechanical engineering , engineering
The phenomenon of outsourcing has spawned a rich body of scholarly work in the last two decades. Yet, the answer to one important question has remained elusive: Does outsourcing really improve firm performance? Addressing this question is important as firms across nations continue to embark on the practice of outsourcing to save operating costs and remain competitive. Scholars, practitioners and policy‐makers need to understand whether and how outsourcing benefits the firm. However, no comprehensive review of empirical evidence has been published so far that can address this question. This study reviews 57 empirical research articles that investigated the outsourcing–firm performance relationship in 47 peer‐reviewed scholarly journals over a 20‐year time‐span (1996–2015). The articles differ widely in research scope, context, level of analysis, data source, time‐span, industry sector, extent of outsourcing and measure of performance. The findings suggest that outsourcing can produce positive, negative, mixed, moderated or no significant impact on the firm. This study also provides useful directions for future research on outsourcing and firm performance.