Making More by Doing Less: An Analysis of Outsourcing and its Effects on Firm Performance

Abstract

This study empirically examined the extent to which outsourcing of both peripheral and near-core tasks influences firms’ financial and nonfinancial performance. In addition, the potential moderating effects of firm strategy and the environment on the outsourcing-performance relationship were examined. Results indicate that, whereas there was no significant direct effect of outsourcing on firm performance, both firm strategy and environmental dynamism moderated the relationship between outsourcing and performance.