Lai, J; Fu, Y; Chen, Y and Du, B (2023) Interactions among antecedents of project outsourcing strategies: Evidence from Chinese construction firms. Engineering, Construction and Architectural Management, 30(10), pp. 5196-5216. ISSN 0969-9988
Abstract
Purpose: Outsourcing is a common practice that is often adopted to reduce costs and enhance capabilities. The underlying logic of a firm's outsourcing strategy is not always evident due to multiple antecedents with interacting effects. This study identifies critical factors that influence outsourcing strategies and reveals their interactions with empirical evidence from Chinese construction firms. Design/methodology/approach: The quantitative decision-making trial and evaluation laboratory (DEMATEL) method was applied to analyze the interrelationships among the antecedents of project outsourcing strategies. First, 24 experts from 13 Chinese construction firms were invited to evaluate and score the influence of each factor on the other. Second, the graph theory and matrix tools of DEMATEL were used to quantitatively obtain the causality among factors and the prominence of each factor within the system. Findings: Among the antecedents, a firm's pursuit of cost efficiency, identity, technological capability and contracting capability are the most prominent factors influencing project outsourcing strategies. For the interactions among these factors, this study reveals that the focal firm's technological capability significantly influences its contracting capability, and they jointly influence the firm's outsourcing practices, the selection of outsourcing vendors and, eventually, its pursuit of cost efficiency. Moreover, legal restrictions in the institutional environment strongly shape this capability–cost efficiency relationship. Originality/value: Twelve critical factors following different theoretical perspectives at varying levels of analysis were identified from the literature review. By revealing the interrelationships among these factors, this study develops a holistic framework that integrates the transaction cost and capability perspectives for understanding project outsourcing strategies embedded in different institutional environments.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | capability; institutional environment; project outsourcing strategies; transaction cost |
| Index terms: | critical factor, outsourcing, interaction, graph theory, identity, construction firm, literature review, strategy, transaction cost, laboratory, cost efficiency, evidence, technological capability, decision-making, methodology |
| Subjects: | organization, business, risk assessment, evaluation and assessment methods, data analysis and analytics, innovation and technology management, economics, research methods, management, theoretical framing, research management, sociology, decision analysis, financial analysis, behavioral psychology |
| Topics: | Cost Management, Business Strategy, Research Practice, Engineering Principles, Risk Management, Procurement |
| Descriptive scope: | 4 PCTA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here