The roles of task-environmental factors in outsourcing strategy: a combinative research

Ming-Ji James Lin and Yi-Pei Huang

International Journal of Business and Systems Research, 2008, vol. 2, issue 3, 285-304

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.

Keywords: consumer demand elasticity; CDE; core competence; intermediates intensity; information technology; IT outsourcing; outsourcing decision systems; economic geography; task-environmental factors; transaction costs. (search for similar items in EconPapers)
Date: 2008
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