Effect of Outsourcing Typologies on Organizational Performance of Small and Medium Enterprises in Kenya

Author(s)

Lagat Dorcas C ,

Download Full PDF Pages: 01-14 | Views: 746 | Downloads: 187 | DOI: 10.5281/zenodo.3441931

Volume 5 - December 2016 (12)

Abstract

The study determined the effects of Business Process Outsourcing on SME performance, effects of knowledge Process Outsourcing on SME performance. The study was guided by Resource-based View, Agency Theory, and Transaction cost Theory.This study used a combination of cross sectional and explanatory research design using a sample size of 440 SMEs. This study deployed the use of a questionnaire as a data collection technique.Descriptive statistical procedures including frequency distributions; means, standard deviation multiple regression, and correlation as a form of inferential statistical analyses were used to test hypothesis respectively.Study findings showed that business process outsourcing and knowledge Process Outsourcing have a positive effect on SME performance. It is, therefore, necessary for SMEs to outsource so as to cut on costs, focus on core business, secure business flexibility, and develop core competencies, inimitable resources and capabilities within the firm. There is a need for SMEs to embrace business process outsourcing in order for SMEs to improve their performance

Keywords

Business Process Outsourcing, Knowledge Process Outsourcing, Small and medium enterprises, Performance

References

  1. Abdi H., (2006). Factor Rotations in Factor Analyses. The University of Texas at Dallas
  2. Adler, P. S. (2003). Making the HR outsourcing decision. MIT Sloan Management Review, 45(1), 53-60.
  3. Argyres, N. (1996). Evidence on the Role of Firm Capabilities in Vertical Integration Decisions. Strategic Management Journal, 17: 129-150.
  4. Barney J.B., Hesterly W., (1996). “Organizational Economics: Understanding the Relationship between Organizations and Economic Analysis,” in Clegg S.R., Hardy C., Nord W.R. (Eds.) Handbook of Organization Studies, Sage Publications, London
  5. Barney, J. 1991. Firm Resources and Sustained Competitive Advantage. Journal of Management, 17: 99-121.
  6. Berry, A. J., Sweeting, R., & Goto, J. (2005).The effect of business advisers on the performance of SMEs. Journal of small Business and Enterprise Development, 13(1), 33-47.
  7. Brannemo A (2006). How does the industry work with sourcing decisions? Case study at two  Swedish companies. J. Manufacturing. Technol. Manage., 17(5): 547-560.
  8. Brown, D. & Wilson, S. (2005). The Black Book of Outsourcing How to Manage the Changes, Challenges, and Opportunities. New York: John Wiley & Sons, Inc.
  9. Carey, P., Subramaniam, N., & Ching, K. C. W. (2006). Internal audit outsourcing in Australia.Accounting and Finance, 46, 11-30.
  10. Carmel, E. and Schumacher, P. (2005). ‘Offshore strategy.' In Carmel E. and Tija, P. (Eds.) Offshoring information technology: sourcing and outsourcing to a global workforce. Cambridge: Cambridge University Press.
  11. Choy K.L., Lee W.B., Lau H.C.W., Choy L.C. (2005), A knowledge-based supplier intelligence retrieval system for outsource manufacturing, Knowledge-Based Systems, 2005; 18:1-17.
  12. Corbett, M.F. (1999). Multiple factors spur outsourcing growth. (Retrieved from www.Outsourcing-Journal.com/issues/jan. 1-6).
  13. Cousins, P. D., Lawson, B., Squire, B., (2006) . Supply chain management: theory and practice – the emergence of an academic discipline. International Journal of Operations & Production Management, 26 (7), pp.697 – 702.
  14. Cullen S., Willcocks L., (2003). Intelligent IT Outsourcing: Eight Building Blocks to Success, Butterworth-Heinemann, Oxford
  15. Doh, J.P. (2005) “Offshore Outsourcing: Implications for International Business and Strategic Management Theory and Practice.” Journal of Management Studies. Vol. 42, No. 3. pp. 695-704
  16. Evalueserve (2005).Knowledge Process Outsourcing – A win situation, Analytics – India Desk Research, Evalueserve, 3 May.  Evalueserve (2006). The next big business opportunity, Moving up the value chain- from BPO to KPO, Business Research, July 13, www.evalueserve.com.
  17. Everaert, P., Sarens, G., & Rommel, J. (2010).Using Transaction Cost Economics to explain outsourcing of accounting. Small Bus Econ, 35(1), 93–112.
  18. Feeny D., Lacity M., Willcocks L., (2005). “Taking the measure of outsourcing providers,” MIT Sloan Management Review, 46, 3, pp. 41-48
  19. Full, C. and Visser, E., (2000), The outsourcing dilemma : A composite approach to the make or buy decision, Management Decision, 38(1) p43-50
  20. G.o.K /CBS/ ICEG/ K-EP. (2011) National Micro and Small Enterprise Baseline survey Results. Nairobi: Government Printer Press
  21. Garengo, P., Biazzo, S. & Bititci, U. S. 2005. ‘Performance measurement systems in SMEs: A review for a research agenda,' International Journal of Management Reviews, 7(1): 25-47
  22. Gilley, K., & Rasheed, A. (2000).Making more by doing less: An analysis of outsourcing and its effects on firm performance. Journal of Management, 26(4), 763-790
  23. Grant, R. M. (1991) “The resource-based theory of competitive advantage: Implications for strategy formulation,” California Management Review, 33(3): 114-135.
  24. Hair, J.F., Black, W.C., Babin, B.J., Anderson, R.E., Tatham, R.L. (2006) Multivariate Data Analysis.Pearson Prentice Hall, Upper Saddle River, N.J.
  25. Holcomb, T. R., M. A. Hitt. 2007. Toward a model of strategic outsourcing. Journal of Operations Management 25, 464-481.
  26. Huang, X.-Y., Yan, N.-N., Qiu, R.-Z., (2009). Dynamic models of closed-loop supply chain and robust HN control strategies. International Journal of Production Research 47 (9), 2279–2300
  27. Jacobides, M. and L. Hitt, L. 2005. Losing the Forest for the Tree? Productive Capabilities and Gains from Trade vs. Transactional Hazards as Drivers of Vertical Scope. Strategic Management Journal, 26: 1209-
  28. Jacobides, M. and Winter, S. 2005. The Co-Evolution of Capabilities and Transaction Costs: Explaining the Institutional Structure of Production. Strategic
  29. Jiang, B., and Qureshi, A. (2006) Research on outsourcing results: current literature and future opportunities. Journal of Management Decision, 44(1), 44-55.
  30. Kaiser, H. F. (1958). The varimax criterion for analytic rotation in factor analysis. Psychometrika, 23, 187-200.
  31. Kehal, H., Singh V.(2006). Outsourcing and Offshoring in the 21st Century: A Socio- Economic Perspective. Idea Group Publishing.
  32. Kessler, E. H., Bierly, P. E., & Gopalakrishnan, S. (2000). Internal vs. external learning in new product development: effects on speed, costs, and competitive advantage. R & D Management, 30(3), 213‐223
  33. Laabs, J.J. (1996), “Duke’s newest power tool,” Personnel Journal, Vol. 75, No. 6, pp.44-50.
  34. Leiblein, M.J., Reuer, J.J., and Dalsace F. 2002. Do make or buy decisions matter? The influence of organizational governance on technological performance. Strategic Management Journal, 23(9): 817-833.
  35. Mashayekhi, B., & Mashayekh, S. (2008). Development of accounting in Iran. The International Journal of Accounting, 43, 66–86
  36. McIvor, R. (2009). How the transaction cost and resource-based theories of the firm inform outsourcing evaluation. Journal of Operations Management, 27, 45-63
  37. Mierau A. (2007). Strategic Importance of Knowledge Process Outsourcing. Technical University of Kaiserslautern Germany
  38. Murray, J., Kotabe, M., &Wildt, A. (1995). Strategic and financial performance implications of global sourcing strategy: A contingency analysis. Journal of International Business Studies, 26(1), 181-202
  39. Norizan, A.R. (2005). An analysis of Malaysian e-community centers in bridging the digital divide, paper  presented at the E-Malaysia Seminar, 6-7 December.
  40. Overby, S. (2007). ABC: An Introduction to Outsourcing. CIO.com..
  41. Pandey, et al. (2004). India’s transformation to a knowledge based economy-Evolving role of Indian diaspora, Evalueserve, July 21. www.evalueserve.com
  42. Pandey, Vivek, Bansal, Veena (2003), A Decision-Making Framework for IT Outsourcing using the Analytic Hierarchy Process
  43. Penrose, E. T. (1959). The Theory of the Growth of the Firm. New York: John Wiley.
  44. Poppo, L., and Zenger, T. (1998). Testing alternative theories of the firm: Transaction cost, knowledge-based, and measurement explanations for make-or-buy decisions in information services. Strategic Management Journal, 19(9): 853-Porter, M.E. (1996), Competitive Strategy: Techniques for analyzing Industries and Competitors, The Free Press, New York.
  45. Quinn, B.J. (2000). Outsourcing innovation: The new engine of growth. Sloan Management Review41 (14):13-23.
  46. Sachdev, R. (2006). The big business of Clinical Outsourcing, Power Jobs, Hindustan Times, 14 March.
  47. Sargeant, A. (2006). Outsourcing Relationship Literature: An Examination and Implications for Future Research, SIGMIS-CPR’06, April 13–15, 2006, Claremont, California, USA.
  48. Schniederjans, M. J., Schniederjans, A. M., & Schniederjans, D. G. (2005).Outsourcing and Insourcing in an International Context. London: M. E. Sharpe.
  49. Sen, F &Shiel, M.(2006). From Business process outsourcing to Knowledge process outsourcing: Some issues. Human Systems Management, Vol. 25, p145-155.
  50. Sengupta, S. (2005), ‘Skills Gap Hurts Technology Boom in India’, New York Times, Technology Section, October 17
  51. Skyrme, D. (1997). Capitalizing on knowledge. London:  Routledge.
  52. Sparrow, E. 2003.Successful IT outsourcing. Great Britain: Springer-VerlagLondon Limited.
  53. Stiglitz, J. (1999). Public Policy for A Knowledge Economy. Accessed September 2012: http://akgul.bilkent.edu.tr/BT-BE/knowledge-economy.pdf.
  54. Stiglitz, Joseph. E. (1999). Economics of the Public Sector (Third Edition). W.W. Norton & Company: New York
  55. Taylor, H. (2006), Critical risks in outsourced IT projects: the intractable and the unforeseen. Communications of the ACM. Vol. 49, (11), str. 75-79.
  56. Teng, J., Cheon, M. and Grover, V. (1995). Decisions to outsource information systems functions: Testing a strategy-theoric-discrepancy model. Decision Sciences, 26,(1), 75-103.
  57. Thoms, Brian (2004), Outsourcing: Inside Out and Outside in. Stevens institute of technology, Hoboken, New Jersey.
  58. Tompkins, J.A. (2005) Don’t Outsource the Relationship, Industrial Engineer, 37, 1 p.30-33
  59. Vining A., Globerman S., „2000. A Conceptual Framework for Understanding the Outsourcing Decision”, European Management Journal, 17/6, 645-654,
  60. Wilson, R., (2005), “An Approach to Some Noncooperative Game Situations with Special Attention to Bargaining,” in Game-Theoretic Models of Bargaining, New York, NY: Cambridge University Press.
  61. Yamane, Taro (1973). “Statistics: an introductory analysis.” New York: Harper & Row.
  62. Yankelovih D. (2003). GBC presentation: Outsourcing offshore-balancing the equation (concentric solutions)
  63. Yin, R. K. (2003) Case study research: Design and methods. Sage Publications, Inc., Thousand Oaks, London, New Dehli.
  64. Rodríguez Espino-, and Robaina, Padròn-V. (2006). A review of outsourcing from the resource- based view of the firm. International Journal of Management Reviews, 8(1), 49–70
  65. Chase, L. (2006) A review of understanding E-government: information systems in public administration. Information Society, 25 (1) pp 75–76

Cite this Article: