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Determinants of Outsourcing Decision in the Manufacturing Industry in Bangladesh

Md. Aminul Islam () and Farid Ahammad Sobhani ()
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Md. Aminul Islam: University Sains Malaysia (USM)
Farid Ahammad Sobhani: University Sains Malaysia (USM)

AIUB Bus Econ Working Paper Series from American International University-Bangladesh (AIUB), Office of Research and Publications (ORP)

Abstract: The purpose of this study was to identify and understand the factors influencing outsourcing decision in the manufacturing industry in Bangladesh. Existing literature revealed that many manufacturing industry were faced with challenges in the competitive environment to be competitive in the market and produce products at the minimum cost as possible yet meeting customer specification without affecting the quality and delivery schedule. Thus, outsourcing could be an alternative to solve most of the problems faced by many manufacturing industry in Bangladesh. This stirred these researchers to identify and understand the possible factors influencing the manufacturing industry in outsourcing decision whether these factors could really influence the management to opt for outsourcing and help in solving the problems. The theoretical framework was developed to hypothesize four components namely reduce operating cost, improve company focus, access to world class capability and unavailability of internal resources in relation to influence outsourcing decision in the manufacturing industry. The proposed study utilized the exploratory approach, whereby the survey method was used. The data was collected through questionnaires in various manufacturing industry in Bangladesh. The findings were analyzed using a statistical software package (SPSS), and the main tools that were used were Cronbach’s Alpha, descriptive and linear regression analysis. The findings revealed that the factors or components identified for the study had significant effect on outsourcing decision except reduce operating cost. This study provided evidence that these factors would influence outsourcing decision in the manufacturing industry in Bangladesh. The recommendations are also offered more in-depth guidelines for maximizing the benefits of outsourcing.

Pages: 22
Date: 2008-06, Revised 2008-06
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