The impact of asset specificity on outsourcing performance : a disaggregated analysis by buyer-supplier asset specificity dimensions
lthough much research has been done on both asset specificity and outsourcing performance, most of the former has focused on the question of governance choice, while the latter has mainly concentrated on the skills required in managing the buyer-supplier relationship, leaving a glaring gap on the role that asset specific, non-redeployable investments made by either buyers or suppliers, could play in determining the success or otherwise of outsourcing relationships (which for the purpose of this thesis, the author defines as relationships characterised by the relocation to external providers of company functions previously performed in-house). This thesis attempts to begin to fill this gap by empirically investigating the impact of asset specificity on outsourcing performance within a disaggregated methodological framework that allows the author to discern the specific effects of various individual dimensions of buyer-supplier asset specific investments. To this end, data were collected by means of self-administered questionnaires sent to a randomly selected sample of UK firms operating in four different service-related industries. Employing both exploratory factor analysis and hierarchical regression analysis, hypotheses on the relationship in question developed from the twin lenses of transaction cost theory (TCT) and the strategy-based literature were tested. The results suggest that whilst all dimensions of buyers' asset specificity have a negative impact on outsourcing performance, the effect of suppliers' asset specific investments on outsourcing performance varies according to the asset specificity dimension examined. In addition, buyer-supplier 'reciprocal specific investments' are found to exert a positive effect on outsourcing performance while 'trust- and information-based collaborative ties', though found to have a direct and positive impact on outsourcing performance, do not seem to play a statistically significant moderating effect on the relationship in question. These findings have profound theoretical and methodological implications, and are also of significance from a managerial perspective.
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