Abstract
Efficiency firms have increasingly turned to outsourcing in an effort to capture cost savings. A critique of these theories as a means of understanding the complexities of R&D outsourcing is presented. The paper has used the Resource-Based View (RBV) and Transaction Cost Economics (TCE) to examine the role of specialized capabilities as a potential source of value creation in firms. Such a study would further contribute to an understanding of the outsourcing phenomenon within firms. A research model is developed that proposes different hypotheses to test from the TCE and RBV of the firm. The main contribution of this study is the offer of a mechanism to combine both theories for the outsourcing decision. This research anticipative finding the TMT positively moderates between TCE and RBV attributes to present competence on integration is support, also indicating the decisions on outsourcing can be inherent advantages in firms.
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