Contract manufacturing, market competition, and labor productivity in US manufacturing industries

Abstract

How does contract manufacturing /outsourcing affect productivity? Existing studies have conflicting empirical findings regarding this issue. This paper aims to reconcile these conflicting findings in the literature by viewing the research question through the lens of the property rights theory. The authors develop a moderated moderation model to empirically examine how productivity is influenced by the interactions among contract manufacturing, competition, and suppliers’ productivity spillover. Our model shows that though conflicting findings have been reported in the literature, each finding holds true under certain conditions which are identified in our paper. In brief, contract manufacturing /outsourcing improves productivity when suppliers’ productivity growth is above average and focal industry’s competition is at medium level. On the other hand, if suppliers’ productivity growth is low, or focal industry’s competition is too high or too low, the impact of contract manufacturing /outsourcing could be negative or not significant.

The influence of business process outsourcing on the productivity of the mobile telecommunication companies

“…By leveraging external expertise and services from external service BPO providers, organisations have direct access to a large, highly skilled talent pool with experience in the latest technologies and trends, which enables businesses to not only save money but also gain access to industry-leading solutions more quickly than ever before ( Cai et al,2020;Yuan et al,2020).Business process outsourcing (BPO) was identified as the appropriate strategy for businesses to decrease costs, increase productivity and profits and create new opportunities by maximizing internal and external resources (Kulembayev, Seitkaziyeva & Yelshibayev 2021;Ge, Wang & Yang, 2021). Despite its prominence in companies, including mobile telecom operators, the result on its influence on the firm's productivity is still inconclusive and an unexplained puzzle (Mozzala et al, 2019;Lee at al.,2019;Lahiri ,2016;Wu et al, 2023) and emerging economies are not also immune to this predicament hence need for the current study.…”

“…Many service companies including South Africa mobile telecom operators use outsourcing as one of the most effective forms of business process organisation to respond quickly to market changes (Trushchenko, Samoshkina & Vikulina,2021;Zhang et al, 2018).Organisations are increasingly focusing on core activities and are looking for specialised service providers to provide other services that are not part of the core competencies, not related to the competitive advantage and this include the mobile telecom operators (Patel et al, 2019;Trushchenko et al,2021;World Bank: World Development Report, 2020).However, there are only a few empirical studies investigating the effects and relationships between business process outsourcing and firm'productivity levels in There is an increasing body of literature on BPO, but there is insufficient information on performance measurement using quantitative indicators in Southern Africa countries because most studies have been conducted in affluent nations, evident by various studies by Hoseini&Nikabadi,(2020) in Iran; Christiansson &Rentzhog,(2019) in Sweden; Espino-Rodríguez & Rodriguez-Diaz, (2021) in Spain; Wu et al, (2023) in US; Kulembayeva et al, (2022) in Russia, Cai et al, (2020) in China; Ge at el., (2021) US ;Lahiri ,(2016) in USA as examples. Some studies were conducted in Kenya, Ghana and Nigeria, but not much was done on linking BPO and firm's productivity.…”

“…Some studies were conducted in Kenya, Ghana and Nigeria, but not much was done on linking BPO and firm's productivity. However, the adoption of BPO practices and their influence on firm performance is still in its early stages in developing countries (Christiansson & Rentzhog,2019).Researchers have suggested that BPO implication on firm's performance using quantitative evaluation is underexplored, in the infancy stage, and worthy of further study (Wu et al, 2023). This research aims to redress the existing gap through analysing the influence of BPO on the firms' productivity of South African mobile operators.…”

“…The outsourcing of manufacturing, services and other economic operations is a common occurrence in most industries. It is a widespread phenomenon in modern business, including the South African mobile telecommunications industry, although the tradeoff on the effect of BPO on the company's operational performance using productivity as the underpinning performance measure is still inconclusive (wu al et., 2023;mozza et al,2019;Laureani & Antony ,2019;Motiani & Kulkarni ,2020). Several studies have analysed the effect of outsourcing on company operational performance, with the majority of them employing qualitative performance measurements in their frameworks, like quality, flexibility while others only consider cost as the quantitative metric (Prajapati, Kant & Tripathi, 2020;Espino-Rodríguez & Rodriguez-Diaz, 2021;Sandhu, Shamsuzzoha & Helo, 2017).…”

“…The current situation in South Africa is that intense competition in the mobile telecom industry of southern developing countries, including South African mobile telecom operators has forced all operators to look for ways to reduce costs of operations, improve productivity and profitability by outsourcing functions such as tower infrastructure management, billing, security, asset management, network planning, maintenance, operation of mobile network base stations, network infrastructure, resolving software problems and monitoring the network on capacity overload (network operation services) spare parts management, equipment maintenance and manufacturing/ assembling but there has been lack of established consensus on the actual end effect of outsourcing (Anwar & Graham 2019;BPESA ,2018).The results of such decisions have yet to be proved empirically. Furthermore, empirical studies attempting to quantify the influence of BPO on firm's productivity levels have yielded mixed results (Wu et al, 2023;Lahiri, 2016).The Souther African developing countries especially the telecom mobile telecom operators are also not spared from this notion.This research aims to reconcile these conflicting findings in the literature by analysing the effect of BPO on the firm's productivity in Southern Africa special reference to South Africa mobile operators. This research also tested the statistically significant relationship between BPO and firm productivity to redress the existing knowledge gap.…”