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The roles of task-environmental factors in outsourcing strategy: a combinative research

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  • Ming-Ji James Lin
  • Yi-Pei Huang

Abstract

This study attempts to do a combinative study that introduces two task-environmental factors from economic-geography perspective in complementary to previous management perspective for establishing practices in outsourcing decision systems. Based on model in Krugman and Venables [Krugman, P. and Venables, A.J. (1995) 'Globalization and inequality of nations', Quarterly Journal of Economics, Vol. 110, pp.857-880], we stress the importance of transportation cost which is conditioned by two task-environmental factors: Intermediates Intensity (II) and Consumers' Demand Elasticity (CDE). Two propositions emerge after mathematical derivation: higher II positively encourages companies to outsource; larger CDE discourages companies to outsource. Several cases are provided to validate our propositions. This research contributes to future study for avoiding bias from ignoring II and CDE.

Suggested Citation

  • Ming-Ji James Lin & Yi-Pei Huang, 2008. "The roles of task-environmental factors in outsourcing strategy: a combinative research," International Journal of Business and Systems Research, Inderscience Enterprises Ltd, vol. 2(3), pages 285-304.
    • Handle: RePEc:ids:ijbsre:v:2:y:2008:i:3:p:285-304
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