Theoretical influences on outsourcing

Abstract

Introduction This chapter provides an overview of the theoretical perspectives that have influenced the development of the framework for outsourcing evaluation and management. The framework draws upon a wide body of literature from a number of areas including business strategy, economics and inter-organisational relationships. This chapter outlines the characteristics and limitations of a number of theories from these areas including transaction cost economics (TCE), the resource-based view of the firm (RBV), the industry view (IV) and the relational view (RV). The analysis of the literature in these areas has had a major influence on the development of the outsourcing framework, which includes a number of aspects from each theoretical standpoint. It is argued that there are a number of inter-dependencies with each of the theoretical perspectives that can assist in outsourcing evaluation and management. The framework recognises the importance of the business strategy and inter-organisational relationship literature to an understanding of outsourcing. There is a growing emphasis in the business strategy literature of the importance of managing beyond the boundaries of the firm as well as within them. This chapter serves as a preface to the following chapter, which provides an outline of the practical problems with outsourcing and an overview of the stages in outsourcing evaluation and management. Transaction cost economics The most influential theory on outsourcing has been Williamson's theory of transaction cost economics (1975).