The roles of task-environmental factors in outsourcing strategy: a combinative research. (1st October 2008)

• Record Type: Journal Article
• Authors: Lin, Ming-Ji James; Huang, Yi-Pei
• Is Part Of: International journal of business and systems research. Volume 2:Number 3(2008)
• Page Start: 285
• Page End: 304
• Publication Date: 2008-10-01
• Subjects: consumer demand elasticity -- CDE -- core competence -- intermediates intensity -- information technology -- IT outsourcing -- outsourcing decision systems -- economic geography -- task-environmental factors -- transaction costs; Management information systems -- Periodicals; Business -- Data processing -- Periodicals; 658.4038011
• Languages: English
• ISSNs: 1751-200X

Abstract

This study attempts to do a combinative study that introduces two task-environmental factors from economic-geography perspective in complementary to previous management perspective for establishing practices in outsourcing decision systems. Based on model in Krugman and Venables [Krugman, P. and Venables, A.J. (1995) 'Globalization and inequality of nations', Quarterly Journal of Economics, Vol. 110, pp.857-880], we stress the importance of transportation cost which is conditioned by two task-environmental factors: Intermediates Intensity (II) and Consumers' Demand Elasticity (CDE). Two propositions emerge after mathematical derivation: higher II positively encourages companies to outsource; larger CDE discourages companies to outsource. Several cases are provided to validate our propositions. This research contributes to future study for avoiding bias from ignoring II and CDE.