Outsourcing and its implications for market success: negative curvilinearity, firm resources, and competition

Over the past few decades, outsourcing has become a widely used and researched means for firms to change their performance. In this article, we attempt to link outsourcing to the market success of firms, specifically their market share. We argue that although firms may be able to increase their mark...

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Bibliographic Details
Published inJournal of the Academy of Marketing Science Vol. 40; no. 2; pp. 329 - 346
Main Authors Kotabe, Masaaki, Mol, Michael J., Murray, Janet Y., Parente, Ronaldo
Format Journal Article
LanguageEnglish
Published Boston Springer US 01.03.2012
Springer
Springer Nature B.V
Subjects
Analysis
Business and Management
Competition
Competition (Economics)
Computer industry
Electronics industry
Forecasts and trends
Market shares
Marketing
Outsourcing
Personal computers
Social Sciences
Studies
United States
Competition
Marketing performance
Outsourcing
Resources
Market share
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Summary:Over the past few decades, outsourcing has become a widely used and researched means for firms to change their performance. In this article, we attempt to link outsourcing to the market success of firms, specifically their market share. We argue that although firms may be able to increase their market share through outsourcing, this is only true up to a point, beyond which market share actually decreases as a consequence of further outsourcing. There is, in other words, a negatively curvilinear (inverted U-shape) relationship between outsourcing and market share. We also hypothesize that the outsourcing–market share relationship is moderated negatively by both the strength of firm resources and the extent of competition in a firm’s market. We empirically confirm these arguments through a panel data analysis containing over 19,000 observations on manufacturing firms and offer some case examples to illustrate the mechanisms driving these results. Finally, we discuss implications for marketing research and practice.
ISSN:0092-0703
1552-7824
DOI:10.1007/s11747-011-0276-z