Effects of internal and relational capabilities on outsourcing: an integrated model
| DOI | https://doi.org/10.1108/02635570810858750 |
| Date | 21 March 2008 |
| Pages | 328-345 |
| Published date | 21 March 2008 |
| Author | Tomás F. Espino‐Rodríguez,Manuel Rodríguez‐Díaz |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
Effects of internal and relational
capabilities on outsourcing:
an integrated model
Toma
´s F. Espino-Rodrı
´guez and Manuel Rodrı
´guez-Dı
´az
University of Las Palmas de Gran Canaria, Las Palmas de Gran Canaria, Spain
Abstract
Purpose – The purpose of this paper is to analyse the impact of relational capability compared to
that of internal capability on outsourcing, and the influence of relational capability as a moderating
variable between outsourcing and internal capabilities. The paper aims to integrate the internal and
relational perspectives in a single model of strategic evaluation.
Design/methodology/approach – This work analyses the outsourcing process in a representative
sample of firms operating in a region of Spain. To accomplish the research objectives, a personal survey was
conducted using a questionnaire to evaluate 13 activities of the order distribution process in the supply chain.
Findings – The results indicate that internal capabilities have a negative effect on outsourcing while
relational capabilities have a positive effect. They also show that, the greater the relational capabilities
of an operation are, the less significant the relationship between internal capabilities and outsourcing
will be.
Practical implications – Firstly, by using the proposed model, companies can evaluate their
internal and relational strategies and compare them to the sector averages at a given moment.
Secondly, they can detect opportunities to improve competitiveness and develop relational capabilities
for some of the activities that they wish to outsource. This work helps identify which process activities
to outsource and which type of relationship should be maintained to develop a set of capabilities.
Originality/value – This paper provides a comprehensive application of a theoretical framework in
a new model of strategic evaluation of outsourcing. Another innovation of this work is the introduction
of relational capabilities as a variable moderating the relationship between internal capabilities and
outsourcing.
Keywords Outsourcing,Modelling, Spain, Relationship marketing,Operations management
Paper type Research paper
Introduction
The outsourcing of determined processes of the supply chain is becoming one of the
most important phenomena contributing to the development of competitive advantage.
Outsourcing must be seen not merely as the firm’s acquisition of products and services
for the manufacture of goods and provision of services, but as a particular form of
strategic alliance (Zineldin and Bredenlo
¨w, 2003). A strategic outsourcing relationship
offers significant benefits, such as economies of scale, a skilled workforce, a high level of
R&D and greater customer added value at lower total cost, thus ensuring profit for all the
partners in the network or alliance (Zineldin and Bredenlo
¨w, 2003). In that respect,
outsourcing represents an opportunity as well as a challenge to many traditional,
integrated organisations (Barden-Fuller et al., 2005). By networking, firms achieve
shorter lead times, increased flexibility and cost efficiency (Nieminen and Takala, 2006 ).
Researchers have mainly studied the factors determining outsourcing from the
viewpoint of transaction costs, paying particular attention to specificity as the factor
The current issue and full text archive of this journal is available at
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IMDS
108,3
328
Received 12 June 2007
Revised 7 November 2007
Accepted 26 November 2007
Industrial Management & Data
Systems
Vol. 108 No. 3, 2008
pp. 328-345
qEmerald Group Publishing Limited
0263-5577
DOI 10.1108/02635570810858750
that most influences outsourcing (Argyres, 1996). In this work, we have used other,
more strategic approaches, such as the internal and relational approaches, to analyse
the outsourcing of operations in the order distribution process. Earlier works recognise
the existence of a negative relationship between outsourcing and the development of
specific or valuable assets (Espino-Rodrı
´guez and Padro
´n-Robaina, 2006). However,
current research opinion recognises the possibility of outsourcing beyond the activities
that do not form part of the core competences (McIvor, 2005; Gottfredson et al., 2005).
This work aims to discover whether cross-organisational boundary capabilities may
influence the levels of outsourcing and improve the strategic value of the operation.
The literature on outsourcing contains few works that analyse relational capabilities as
both a direct and a moderating variable (Nesheim, 2001).
The importance attached to the outsourcing of highly valuable activities has led some
authors to propose models that aid outsourcing decisions by incorporating some factors
related to the relational view (Cox, 1996; McIvor, 2005). In that respect, there is a need for
models that integrate the relational and internal views and so facilitate decisions to
outsource activities. In this paper, we propose the following research objectives to:
(1) identify the effects of internal and relational capabilities on outsourcing; and
(2) develop a model to evaluate outsourcing based on the resource based view and
the relational view.
The following section develops a review of the literature on the two perspectives used
in this research (internal and relational view) and this is followed by a proposal of a
strategic evaluation model that integrates those two perspectives. The research
hypotheses are then put forward. The next section explains the methodology used and
presents the principal findings. Finally, the main conclusions and the implications for
industry management are set out.
Literature review
The literature may contain as many definitions of outsourcing as it does research
works, with most authors agreeing that outsourcing entails going outside the firm to
acquire determined activities than are not processed internally (Espino-Rodrı
´guez and
Padro
´n-Robaina, 2006). Authors normally propose a definition of outsourcing that is
related to the objectives of their research. Thus, we propose the following definition to
serve as a guide for accomplishing the objectives of this work:
Outsourcing is a strategic decision that entails the external contracting of determined activities
that are necessary to the distribution of products and services to the end customer. To that end,
agreements or contracts are established with suppliers to facilitate the development of
relational capabilities and so increase the strategic value of the outsourced activities.
That definition implies that, prior to outsourcing activities; firms must undertake an
internalanalysis of theirprocesses and then use agreementsthat permitthe strategic value
of the activities to increase. Therefore, we analyse outsourcing from two theoretical
perspectives, namely the resource-based view of the firm and the relational view.
Resource-based view of the firm
The resource-based view of the firm has been employed over the last decade to explain
the outsourcing strategy. Within that perspective, the core competences approach
Relational
capabilities
on outsourcing
329
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