IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v147y2014ipcp614-623.html
   My bibliography  Save this article

Firm-level outsourcing decision making: A balanced scorecard-based analytic network process model

Author

Listed:
  • Tjader, Youxu
  • May, Jerrold H.
  • Shang, Jennifer
  • Vargas, Luis G.
  • Gao, Ning

Abstract

We combine the Analytic Network Process (ANP) and the Balanced Scorecard (BSC) to build a cohesive decision model for determining firm level IT outsourcing strategy. Although prior research has confirmed the existence of interactions among BSC indicators and the potential impact of those interactions on firm level performance, interactions have hitherto not been fully understood and implemented, due to lack of adequate tools. In this paper, we take advantage of the strength of the ANP technique to address the interaction issues between indicators when applying the BSC. The ANP establishes the interactions among the indicators, prioritizes the indicators under the four BSC perspectives, and then identifies the best outsourcing strategy through synthesis. A case company is used to study the feasibility of our approach at firm level outsourcing decision making. Finally, we examine the robustness of the model through sensitivity analysis, and demonstrate the importance of incorporating indicator interactions when operationalizing BSC. Managerial insights and implications derived through model analysis are discussed.

Suggested Citation

  • Tjader, Youxu & May, Jerrold H. & Shang, Jennifer & Vargas, Luis G. & Gao, Ning, 2014. "Firm-level outsourcing decision making: A balanced scorecard-based analytic network process model," International Journal of Production Economics, Elsevier, vol. 147(PC), pages 614-623.
  • Handle: RePEc:eee:proeco:v:147:y:2014:i:pc:p:614-623 DOI: 10.1016/j.ijpe.2013.04.017
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527313001813
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Raghuram G. Rajan & Luigi Zingales, 1998. "Power in a Theory of the Firm," The Quarterly Journal of Economics, Oxford University Press, vol. 113(2), pages 387-432.
    2. Alchian, Armen A. & Demsetz, Harold, 1973. "The Property Right Paradigm," The Journal of Economic History, Cambridge University Press, vol. 33(01), pages 16-27, March.
    3. Osei-Bryson, Kweku-Muata & Ngwenyama, Ojelanki K., 2006. "Managing risks in information systems outsourcing: An approach to analyzing outsourcing risks and structuring incentive contracts," European Journal of Operational Research, Elsevier, vol. 174(1), pages 245-264, October.
    4. Lyons, Bruce R., 1995. "Specific investment, economies of scale, and the make-or-buy decision: A test of transaction cost theory," Journal of Economic Behavior & Organization, Elsevier, vol. 26(3), pages 431-443, May.
    5. Grossman, Sanford J & Hart, Oliver D, 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 691-719, August.
    6. repec:bla:joares:v:37:y:1999:i:2:p:319-352 is not listed on IDEAS
    7. Loebbecke, Claudia & Huyskens, Claudio, 2009. "Development of a model-based netsourcing decision support system using a five-stage methodology," European Journal of Operational Research, Elsevier, vol. 195(3), pages 653-661, June.
    8. Bengt Holmstrom, 1979. "Moral Hazard and Observability," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 74-91, Spring.
    9. Meade, Laura & Sarkis, Joseph, 1998. "Strategic analysis of logistics and supply chain management systems using the analytical network process," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 34(3), pages 201-215, September.
    10. Tjader, Youxu Cai & Shang, Jennifer S. & Vargas, Luis G., 2010. "Offshore outsourcing decision making: A policy-maker's perspective," European Journal of Operational Research, Elsevier, vol. 207(1), pages 434-444, November.
    11. Bahli, Bouchaib & Rivard, Suzanne, 2005. "Validating measures of information technology outsourcing risk factors," Omega, Elsevier, vol. 33(2), pages 175-187, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gunasekaran, Angappa & Irani, Zahir & Choy, King-Lun & Filippi, Lionel & Papadopoulos, Thanos, 2015. "Performance measures and metrics in outsourcing decisions: A review for research and applications," International Journal of Production Economics, Elsevier, vol. 161(C), pages 153-166.
    2. Chemweno, Peter & Pintelon, Liliane & Van Horenbeek, Adriaan & Muchiri, Peter, 2015. "Development of a risk assessment selection methodology for asset maintenance decision making: An analytic network process (ANP) approach," International Journal of Production Economics, Elsevier, vol. 170(PB), pages 663-676.
    3. Quezada, Luis E. & López-Ospina, Héctor A., 2014. "A method for designing a strategy map using AHP and linear programming," International Journal of Production Economics, Elsevier, vol. 158(C), pages 244-255.
    4. repec:eee:proeco:v:194:y:2017:i:c:p:52-58 is not listed on IDEAS
    5. Büyüközkan, Gülçin & Güleryüz, Sezin, 2016. "An integrated DEMATEL-ANP approach for renewable energy resources selection in Turkey," International Journal of Production Economics, Elsevier, vol. 182(C), pages 435-448.
    6. Varmazyar, Mohsen & Dehghanbaghi, Maryam & Afkhami, Mehdi, 2016. "A novel hybrid MCDM model for performance evaluation of research and technology organizations based on BSC approach," Evaluation and Program Planning, Elsevier, vol. 58(C), pages 125-140.
    7. repec:eee:jrpoli:v:52:y:2017:i:c:p:181-191 is not listed on IDEAS

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:147:y:2014:i:pc:p:614-623. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.