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When Performance Fails to Meet Expectations: Managers' Objectives for Outsourcing

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  • Suzanne Young
  • Johanna Macneil

Abstract

Managers may implement outsourcing for one or more of a range of reasons: to improve strategic focus, to achieve numerical or functional flexibility, to reduce costs or risk, to change their own roles, to change organisational culture or workplace power structure, and to intensify work effort. However, often there are associated costs, either unanticipated or unquantified. This paper provides evidence from two food processing companies to address the following questions: (1) Why do managers pursue outsourcing? and (2) Have managers anticipated and quantified the potential costs as well as the benefits of outsourcing? We conclude that while it seems clear that managers do begin with clear objectives for outsourcing and anticipate that benefits will flow, sometimes these objectives are not met, unexpected costs are incurred, or objectives change as new information is available or situations change. In other cases managers have been unable to objectively substantiate the outsourcing decision.

Suggested Citation

  • Suzanne Young & Johanna Macneil, 2000. "When Performance Fails to Meet Expectations: Managers' Objectives for Outsourcing," The Economic and Labour Relations Review, , vol. 11(1), pages 136-168, June.
    • Handle: RePEc:sae:ecolab:v:11:y:2000:i:1:p:136-168
    DOI: 10.1177/103530460001100106
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    References listed on IDEAS

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    1. Simon Domberger, 1994. "Public Sector Contracting: Does It Work?," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 27(3), pages 91-96, July.
    2. Domberger, S & Meadowcroft, S & Thompson, D, 1987. "The impact of competitive tendering on the costs of hospital domestic services," Fiscal Studies, Institute for Fiscal Studies, vol. 8(4), pages 39-54, November.
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    Cited by:

    1. Almas Heshmati, 2003. "Productivity Growth, Efficiency and Outsourcing in Manufacturing and Service Industries," Journal of Economic Surveys, Wiley Blackwell, vol. 17(1), pages 79-112, February.
    2. Suzanne Young, 2002. "Outsourcing and Downsizing: Processes of Workplace Change in Public Health," The Economic and Labour Relations Review, , vol. 13(2), pages 244-269, December.

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