Title
Strategic outsourcing in SMEs
Date Issued
04 February 2020
Access level
metadata only access
Resource Type
journal article
Author(s)
University of Skövde
Publisher(s)
Emerald Group Holdings Ltd.
Abstract
Purpose: So far, there are very few empirical research studies available on the outsourcing pattern among small- and medium-sized enterprises (SMEs). The purpose of this paper is to examine strategic outsourcing among Icelandic SME service firms, from 2009 to 2018. Design/methodology/approach: The data presented in this paper cover responses from 802 small service firms, which were collected through telephone and online questionnaires. In order to have sufficient data on strategic outsourcing and to ensure a decent analysis, three surveys were combined. Findings: The main finding of the present paper is that SMEs that have a developed strategy on outsourcing seem to perform better than those who do not have. The former are more likely to have achieved cost reduction, especially in housing and finance, and they use outsourcing to increase core businesses. They select vendor firms more on the bases of cost and services, rather than personal contacts. Also, these firms have improved service quality, by focusing on their core competences. Originality/value: To the authors‘ knowledge, the present study is one of the few empirical studies that have examined outsourcing in SMEs from a strategic perspective. The findings are valuable for managerial practice and could be a base for outsourcing strategies in SMEs.
Start page
73
End page
84
Volume
27
Issue
1
Language
English
OCDE Knowledge area
Negocios, Administración
Economía, Negocios
Subjects
Scopus EID
2-s2.0-85076132808
Source
Journal of Small Business and Enterprise Development
ISSN of the container
14626004
Sponsor(s)
”, Journal of Information Technology , Vol. 31 No. 3 , pp. 269 - 328 . Table I Classification of firms in the survey according to Icelandic classification of NACE Number % Wholesale, retail trade and repairs 217 28.6 Hotels and restaurants 101 13.3 Transport and communications 58 7.6 Financial intermediation 57 7.5 Real estate and business activities 103 13.6 Public administration 8 1.1 Education 11 1.4 Health services and social work 39 5.1 Hi-tech- and knowledge intensive a 80 10.5 Other services 85 11.2 Missing values 43 Note: a This category was added by the research team and deviates from the Icelandic classification of NACE Table II Proportion of firms outsourcing and industrial classification of firms in the survey % Wholesale, retail trade and repairs 73.6 Hotels and restaurants 66.7 Transport and communication 73.7 Financial intermediation 80.7 Real estate and business activities 79.6 Public administration 87.5 Education 100.0 Health services and social work 78.4 Hi-tech- and knowledge intensive 82.3 Other services 76.5 Table III Proportion of firms outsourcing tasks and firm’s strategy for outsourcing Tasks outsourced No strategy (%) Outsourcing strategy (%) p -value a Cleaning 35.7 41.0 0.278 Security 38.9 39.3 0.931 Cafeteria 7.4 9.0 0.550 Information technology 51.5 49.2 0.646 Wages 17.4 21.0 0.319 Finances 5.9 13.9 0.003 Human resource management 0.9 0.8 0.958 Education 4.6 5.7 0.591 Phone answering 3.7 5.7 0.313 Communications 9.8 6.6 0.271 Consulting 18.3 17.2 0.789 Accounting 37.0 40.2 0.516 Back office 2.4 4.1 0.305 Driving 17.2 21.3 0.291 Other 27.2 41.8 0.002 Note: a χ 2 test Table IV Reasons for outsourcing and existence of outsourcing strategy (proportion of firms) Reason for outsourcing No strategy (%) Outsourcing strategy (%) p -value a Cost reduction 35.9 45.1 0.062 Less staff turnover 12.2 10.7 0.645 Increased expertise 47.8 41.0 0.178 Simpler operation 42.2 45.9 0.460 Operational security 16.5 15.6 0.801 The goal of minimizing investment 12.4 13.9 0.649 Increased emphasis on core business 15.2 27.9 0.001 Increased service 7.4 11.5 0.145 Other 18.0 20.5 0.536 Note: a χ 2 test Table V Vendor selection factors and existence of outsourcing strategy (proportion of firms) Selecting factor No strategy (%) Outsourcing strategy (%) p -value a Costs 47.2 60.7 0.008 Personal connections 31.5 17.2 0.002 Trust 35.4 39.3 0.425 Security 20.0 17.2 0.489 Trust/Security 42.6 44.3 0.743 Speed 6.5 8.2 0.516 Technology equipment 9.3 6.6 0.333 Image 7.0 5.7 0.632 Services 27.4 39.3 0.010 Expertise 25.2 23.8 0.743 Flexibility 10.9 13.9 0.346 Location 10.7 8.2 0.424 Other 11.3 20.5 0.008 Note: a χ 2 test Table VI Firm’s activities outsourced and firm’s strategy for outsourcing (proportion of firms) Activity No strategy (%) Outsourcing strategy (%) p -value a Core activity 16.9 19.0 0.024 Support activity 65.1 52.6 – Combination 18.0 28.4 – Note: a χ 2 test Table VII Mean score for managers on different statements regarding their experience of outsourcing and firm’s strategy for outsourcing No strategy M (SD/ n ) Outsourcing strategy M (SD/ n ) p -value a Improved service quality 2.47 (0.83/427) 2.27 (0.92/114) 0.018 Reduced cost 3.01 (1.10/421) 2.71 (1.28/112) 0.008 Increased expertise 2.44 (0.94/424) 2.47 (1.06/113) 0.960 Reduced risk 2.41 (0.90/418) 2.37 (0.96/111) 0.397 Improved service to customers 2.42 (0.87/418) 2.36 (0.91/109) 0.371 Focus on core competencies 2.32 (0.82/420) 2.15 (0.94/112) 0.029 Cost discipline/control 2.67 (0.93/415) 2.76 (1.09/111) 0.584 Value added has increased 2.65 (0.85/418) 2.57 (0.89/115) 0.342 Note: a Mann–Whitney U test Table VIII Cost reduction following outsourcing and firm’s strategy for outsourcing (proportion of firms) No strategy (%) Outsourcing strategy (%) p -value a No cost reduction 55.5 38.7 0.002 Cost reduction 44.5 61.3 Note: a χ 2 test Table IX Costs reducing factors and firm’s strategy for outsourcing (proportion of firms) Factor No strategy (%) Outsourcing strategy (%) p -value a Housing 3.5 9.0 0.010 Cost of purchasing equipment 12.0 14.8 0.407 Cleaning costs 12.8 9.8 0.370 Security guard costs 7.6 7.4 0.931 Cafeteria 2.2 4.9 0.099 Finance costs 4.1 9.0 0.030 Human resource management 2.2 2.5 0.850 Education costs 1.3 2.5 0.358 Telephone answering cost 2.2 2.5 0.850 Cost of consulting 3.0 2.5 0.733 Cost accounting 13.7 15.6 0.596 Delivering Cost 5.0 7.4 0.306 Other 11.7 26.2 <0.001 Note: a χ 2 test.
Sources of information:
Directorio de Producción Científica
Scopus