Performance implications of outsourcing: A meta-analysis

Abstract

Although outsourcing remains a dominant strategic choice for managers, the understanding of its implications on the firm remains inconclusive. In this paper we focus on empirical evidence around contingencies that determine whether and how outsourcing impacts firm performance. Specifically, we examine how type of value chain activity (core vs. non-core), industrial nature of activity (manufacturing vs. services), and provider’s location (domestic vs. international) impact performance. We conduct a meta-analysis of 121 samples from 106 primary studies spanning over 28 years (1992–2019). We find that outsourcing–firm performance relationship is positive. But more importantly, our results demonstrate that the association is stronger for non-core outsourcing than core outsourcing. Interestingly the outsourcing–firm performance relationship does not meaningfully vary across manufacturing and services outsourcing. Our results further indicate that the positive relationship is stronger for international outsourcing than domestic outsourcing. We discuss implications of our findings and present opportunities for future research.