IT outsourcing and firm-level performance: A transaction cost perspective

Examining the links between logistics outsourcing, company competitiveness and selected performances: the evidence from an emerging country

Purpose

This study examines the mediation effects of time-based competitiveness, cost-based competitiveness and customer performance between logistics outsourcing and financial performance.

Design/methodology/approach

The study relied on a questionnaire as the primary data collection instrument and further employed partial least squares structural equation modelling technique to test all formulated hypotheses.

Findings

The results demonstrate that logistics outsourcing has a significant positive impact on time-based competitiveness, cost-based competitiveness, customer performance and financial performance. Time-based competitiveness and cost-based competitiveness were both found to have a significant positive impact on financial performance; however, customer performance had no significant impact on financial performance. The mediation analysis further indicates that while both time-based competitiveness and cost-based competitiveness play mediation effects between logistics outsourcing and financial performance, customer performance plays no mediation effect between logistics outsourcing and financial performance.

Research limitations/implications

The sampled firms for this study came from a single emerging country; hence, the results cannot be generalized or imported to reflect the results that may be obtained from other emerging geographical settings.

Practical implications

The results provide sufficient evidence for managers to turn their attention to logistics outsourcing, as a transformative business initiative, to gain time-based and cost-based competitiveness so as to improve financial performance.

Originality/value

The study provides significant insight and makes an additional contribution to literature in the area of logistics outsourcing, especially by collecting data from an emerging country. Modelling time-based competitiveness, cost-based competitiveness and customer performance as mediating variables between logistics outsourcing and financial performance make this work relatively different from other studies.

Outsourcing and firm performance: a meta-analysis

Purpose

In the extant literature, the effect of outsourcing activities on the firm performance has been an area of interest for several decades; yet, the body of knowledge lacks a holistic view of this phenomenon. The potential outcomes of outsourcing and its impact on firm performance have not been aggregated in the literature. The purpose of this paper is to conduct a meta-analysis of 51 empirical results using 24 articles to examine the relationship between these variables and firm performance. The authors discuss the extant literature and examine which type of outsourcing has the greatest influence on firm performance. The authors also present the limitations and future opportunities. Theoretical and managerial implications are discussed to highlight which outsourcing functions would be fiscally beneficial for firms.

Design/methodology/approach

This paper takes a granular approach by looking at different outsourced functions in the both the manufacturing and service industry. Using meta- analysis, this paper combined the quantitative study data from several selected studies in an effort to increase power, improve the effect size and resolve the uncertainty about the effects of outsourcing activities on firm performance measures.

Findings

The authors found that outsourcing enhances the firm performance. When outsourcing functions were studied individually, only IT outsourcing had significant effects on firm performance in comparison to other forms of outsourcing. This might be attributed to the fact that IT outsourcing is less costly to implement in the organization compared with other forms of outsourcing.

Originality/value

This paper is the first paper that uses a meta-analytic approach to investigate the relationship between outsourcing and performance measures based on past empirical studies that have used both primary and secondary data.

Reliability and validity issues in analysis of IT spending using IT managerial control ratios

Purpose

The purpose of this paper is to critically evaluate the practice of IT cost benchmarking using IT managerial control ratios. First, numerous reliability and validity issues that this practice is plagued by are discussed. Second, recommendations on addressing some of these reliability and validity issues are also proposed.

Design/methodology/approach

This is a conceptual paper that draws on literature utilizing IT managerial control ratios to discuss various reliability problems associated with these measures and also makes use of IT strategy theory to challenge the validity of common interpretations of IT managerial control ratios.

Findings

This study explains that IT managerial control ratios are subject to numerous reliability and validity issues. The reliability issues arise from the inherent volatility of some of the variables used in these ratios and difficulties that executives have in providing a reliable estimate of those variables when they are approached by market research firms. The validity issues arise from the fact that high and low values of these ratios are subject to different and, at times, somewhat orthogonal theoretical interpretations.

Practical implications

IT managerial control ratios are often at the heart of important capital allocation decisions as well as studies which form important stakeholders’ perceptions regarding the business value of IT. These important uses of IT managerial control ratios should not be carried out without understanding the reliability and validity issues discussed in this paper.

Originality/value

While IT managerial control ratios are used extensively in benchmarking and research, very few researchers and practitioners possess a full understanding of the reliability and validity issues associated with these measures. This can potentially lead to sub-optimal capital allocation decisions and erroneous findings in studies. This paper provides a comprehensive overview of these issues and recommends possible remedies.

Vendor Opportunism in it Outsourcing: A TCE and Social Capital Perspective

Academic researchers have paid significant attention to the drivers of opportunistic behavior, yet our understanding of how opportunistic behavior can be mitigated remains relatively fragmented. Our investigation will focus on the social context and more specifically on the role of social capital in the deterrence of opportunistic behavior. On the basis of two qualitative case studies in the financial sector, we will illustrate how the structural, cognitive and relational dimensions of social capital can reduce internal and behavioral uncertainty between the outsourcing partners, thereby facilitating the mitigation of opportunistic behavior. In our study we combine the theory of transaction costs with social capital theory and demonstrate how they can usefully complement each other to enhance our understanding of mechanisms that can deter opportunistic behavior.

Impact of Vendor Selection on Firms’ IT Outsourcing

Information technology (IT) outsourcing is often used as a cost-saving strategy for firms. In IT outsourcing, the choice of vendor is a key factor determining success. This study examines the impact that the choice of IT vendor has on firms’ IT outsourcing in Korea. The authors empirically analyzed the impact of certain characteristics of IT vendors on the market value of client firms in Korea using the event study methodology. First, the authors found that IT outsourcing announcements significantly increased the market value of firms. The authors also found that the market response to high asset-specific services of the IT vendor was significantly greater than the response to low asset-specific services. The authors’ results also showed that the effect of Korean vendors was greater than that of foreign vendors. However, the difference between IT outsourcing to large vendors and small vendors in Korea was not significant, in contrast to the US. The information provided in this study can be used by client firms to select better IT vendors and by IT vendors to develop strategies to survive the rapidly changing IT outsourcing market in Korea.

Moving towards efficient, safe, and meaningful healthcare: issues for automation

Correcting problems in healthcare delivery has become a top priority in the USA due to skyrocketing insurance costs and fast growth in national healthcare spending. This paper is aimed at examining how Health Information Technology (HIT) could be used to help the USA move towards efficient, safe, and meaningful healthcare. Our study is focused on healthcare needs in three areas: documentation, standardisation, and design and implementation. Urgent research issues in each area are presented. Our findings maintain that unique needs in the diverse healthcare environments must be incorporated into the convergent HIT system.