Outsourcing and Flexibility

This study examines the direct, concurrent effect of several economic and organisational theories on the outsourcing decision, and analyses the relationship between outsourcing and other workplace flexibility dimensions, as well as their concurrent impact of firm performance. The results of a survey to a sample of 156 Spanish firms reveal that outsourcing intensity is positively explained by production cost advantages, transaction costs, environmental dynamism, and firm strategy. External cooperation and firm performance are not predictors of outsourcing. Financial performance is positively explained by outsourcing and functional flexibility, and negatively by external numerical flexibility. Firm maturity is a negative moderator on the relationship between outsourcing and financial performance. Innovation performance is positively explained by outsourcing and functional flexibility, and firm maturity is also a negative moderator on outsourcing and firm performance. And strategic flexibility is positively explained by outsourcing and internal numerical flexibility, and negatively by external numerical flexibility