Firm enablement through outsourcing: a longitudinal analysis of how outsourcing enables process improvement under financial and competence constraints

Abstract

The dominant view is that outsourcing is driven by efficiency considerations. We demonstrate that a different path to outsourcing originates from critical internal resource shortages. These shortages pose a critical dilemma; on the one hand outsourcing is a reasonably durable approach to solving resource shortages. On the other hand, the same resource shortages complicate the management of outsourcing and may create knowledge and evaluation problems. We empirically examine this dilemma and thereby add to the limited work on the enabling effects of outsourcing under resource constraints. We employ two rich and unique panel datasets of Australian firms observed over five-year periods, to test ..