Outsourcing and insourcing of organizational activities: the role of outsourcing process mechanisms

We study outsourcing decision as a process not an event, and investigate the influences of organizational mechanisms on its sustainability

Fariborz Damanpour; Catherine Magelssen; Richard M. Walker

2019

Scholarcy highlights

  • Outsourcing and insourcing Outsourcing is defined as a strategic decision to transfer organizational activities or sub-activities to outside suppliers
  • Organizations insourced 34 percent of the programs that were outsourced, indicating that a relatively large portion of outsourcing decisions are reversed over time
  • We offered that over time the learning from outsourcing could result in a process that increases the sustainability of outsourcing decisions and reduce its reversal
  • Data analyses from a longitudinal dataset of outsourcing and insourcing of public services showed that insourcing is relatively common, and is influenced primarily by the implementation mechanisms of the outsourcing process
  • Future research can expand and extend the characterization of the outsourcing process as a specific capability to carry out effective transformation of resources to outcomes
  • The coefficient for regular monitoring indicates that adopting all regular monitoring mechanisms is associated with 5.8 percent fewer services insourced than if the organization adopted no regular monitoring mechanisms
  • The task is challenging as the implementation of a decision is more difficult to study than its adoption, but the effort will be essential in advancing theory and assisting practice

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