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Outsourcing

Abstract

This study seeks to investigate the benefits of outsourcing in the context of franchising. As an academic subject, outsourcing has attracted academic attention

Outsourcing is a practice in business whereby certain activities or services are got from outside the firm ((Teng et al., 1995, Gilley and Rasheed, 2000; Espino-Rodrı´guez and Gil-Padilla, 2005). Evidence of outsourcing can be found everywhere over the last three decades, from the basic IT systems to more strategic outsourcing (Jain & Natarajan, 2011). There have been numerous attempts at understanding outsourcing theoretically and empirically (Kakabadse and Kakabadse, 2003; Maiga and Jacobs, 2004; Taylor, 2005; Jiang et al., 2006; Jiang and Qureshi, 2006). Such studies have sought to understand the factors that drive outsourcing decisions (Maiga and Jacobs, 2004; Taylor, 2005; Jiang et al.) and the effect of outsourcing on business performance (Bolat & Yilmaz, 2009; Jiang and Qureshi, 2006; Kakabadse and Kakabadse, 2003).

“outsourcing enables franchisors to provide strong support to their franchisees while keeping their corporate overhead costs in check” (Baugh, 2014).

Most outsourcing decisions are made by the company’s desire to balance insourcing and outsourcing in its operations (Nordigården et al, 2014). When in-house production of

Venkatesan (1992), Quinn and Hilmer (1994), argue that a link should be made between outsourcing and the company’s overall strategy.

Outsourcing improves the competitive positon of the company and reduces costs (Bolat & Yilmaz, 2009). It allows companies to focus more on their performance and leverage their shortage of skill (Hatipoglu, 2015).

However, outsourcing in relation to franchising is still understudied, particularly in Saudi Arabia. For instance, there are very few studies that examine the benefits of outsourcing in franchising (example). This is largely because

Baugh, P. (2014). Outsourcing real estate - A path to expansion. Franchising World, 46(3), 39-40. Retrieved from https://search.proquest.com/docview/1515725828?accountid=142908

Bolat, T., & Yilmaz, Ö. (2009). The relationship between outsourcing and organizational performance. International Journal of Contemporary Hospitality Management, 21(1), 7-23. doi: http://dx.doi.org/10.1108/09596110910930151

Espino-Rodrı´guez, T.F. and Gil-Padilla, A.M. (2005), “Determinants of Information Systems Outsourcing in Hotels from the Resource-Based view: An Empirical Study”, International Journal of Tourism Research, Vol. 7, pp. 35-47.

Gewald, H. (2010). The perceived Benefits of Business Process Outsourcing. Strategic Outsourcing: An International Journal, 3(2), 89-105. doi: http://dx.doi.org/10.1108/17538291011060330

Gilley, K.M. and Rasheed, A. (2000), “Making More by Doing less: An Analysis of Outsourcing and its Effects on Firm Performance”, Journal of Management, Vol. 26 No. 4, pp. 763-90.

Hamada, K. (2012). THE Benefit of Reduced Competition and the Cost of Information Rent Under Outsourcing. Bulletin of Economic Research, 64(2), 209. Retrieved from https://search.proquest.com/docview/992977517?accountid=142908

Harland, C., Knight, L., Lamming, R., & Walker, H. (2005). Outsourcing: Assessing the Risks and Benefits for Organizations, Sectors and Nations. International Journal of Operations & Production Management, 25(9), 831-850. Retrieved from https://search.proquest.com/docview/232337858?accountid=142908

Hatipoglu, C. (2015). Benefits and Risks of Outsourcing in Information and Communication Technology 1. IIB International Refereed Academic Social Sciences Journal, 6(20), 108-120. doi: http://dx.doi.org/10.17364/IIB.20152013532

Jain, R. K., & Natarajan, R. (2011). Factors Influencing the Outsourcing decisions: A Study of the Banking Sector in India. Strategic Outsourcing: An International Journal, 4(3), 294-322. doi: http://dx.doi.org/10.1108/17538291111185485

Jiang, B. and Qureshi, A. (2006), “Research on Outsourcing Results: Current Literature and Future Opportunities”, Management Decision, Vol. 44 No. 1, pp. 44-55.

Jiang, B., Frazier, G. and Prater, E. (2006), “Outsourcing Effects on Firms’ Operational Performance: an empirical study”, International Journal of Operations & Production Management, Vol. 26 No. 12, pp. 1280-300.

Kakabadse, A. and Kakabadse, N. (2003), “Outsourcing Best practice: Transformational and Transactional Considerations”, Knowledge and Process Management, Vol. 10 No. 1, pp. 60-71.

Maiga, A.S. and Jacobs, F.A. (2004), “The Association Between Benchmarking and Organizational Performance: An Empirical Investigation”, Managerial Finance, Vol. 30 No. 8, pp. 13-33.

Manyasi, J. N., & Omusotsi, M. K. (2014). Influence of Outsourcing on Firm Competitiveness: A Case of the Sugar Industry in Kenya. International Journal of Management Research and Reviews, 4(4), 438-448. Retrieved from https://search.proquest.com/docview/1525827141?accountid=142908

Nordigården, D., Rehme, J., Brege, S., Chicksand, D., & Walker, H. (2014). Outsourcing decisions - the case of parallel production. International Journal of Operations & Production Management, 34(8), 974-1002. Retrieved from https://search.proquest.com/docview/1651022786?accountid=142908

Quinn, J.B. and Hilmer, F.G. (1994), “Strategic outsourcing”, Sloan Management Review, Vol. 35 No. 4, pp. 43-55.

Taylor, T. (2005), “In Defense of Outsourcing”, Cato Journal, Vol. 25 No. 2, pp. 367-77

Teng, J., Cheon, J. and Grover, V. (1995), “Decisions to Outsource Information Systems Functions: Testing a Strategy-theoretic Discrepancy Model”, Decision Sciences, Vol. 26 No. 1, pp. 75-103.

Venkatesan, R. (1992), “Strategic sourcing – to Make or not to Make”, Harvard Business Review,Vol. 70 No. 6, pp. 98-107.