Outsourcing impact on manufacturing firms’ value: Evidence from Japan

Abstract

Previous studies on the effects of outsourcing have relied largely on anecdotal evidence, non-financial metrics or accountingbased measures that ignore intangible value. This study views outsourcing effects from its future revenue-generation potential, using market value. The relation between firms' market valuation and outsourcing decisions is investigated using a cross-sectional valuation approach. Results based on Japanese manufacturing industries data from 1994 to 2002 indicate that core business-related outsourcing, offshore outsourcing, and shorter-term outsourcing have positive effects on outsourcing firms' market value. In contrast, non-core business-related outsourcing, domestic outsourcing, and longer-term outsourcing are not found to enhance firm value. #

An Empirical Investigation of Accounting Outsourcing in Iranian SMEs: Transaction Cost Economics and Resource-Based Views

“…In fact, human assets are specific when professional accountants require specialized knowledge of the specific characteristics of the firm so as to carry out a specific accounting function (Everaert et al, 2010). According to TCE, when asset specificity is low, and transactions are relatively frequent, transactions might be governed by outsourcing (Watjatrakul, 2005;Jiang et al, 2007;Chang et al, 2009). In other words, higher levels of asset specificity would lead to a lower amount of the core businesses being outsourced (Chang et al, 2009;Jiang et al, 2007).…”

“…According to TCE, when asset specificity is low, and transactions are relatively frequent, transactions might be governed by outsourcing (Watjatrakul, 2005;Jiang et al, 2007;Chang et al, 2009). In other words, higher levels of asset specificity would lead to a lower amount of the core businesses being outsourced (Chang et al, 2009;Jiang et al, 2007). However, human asset specificity is an important driver for the outsourcing in internal audit function (Spekle´ et al, 2007), and accounting services (Everaert et al, 2010).…”

Factors Influencing Accounting Outsourcing Practices among SMEs in Pakistan Context: Transaction Cost Economics (TCE) and Resource-Based Views (RBV) Prospective

“…Indeed, human assets are specific when professional accountants entail specialized knowledge of the particular attribute of a business concern (Everaert et al, 2010) while to perform a special accounting function. In accordance with TCE, when transactions are somewhat recurrent and asset specificity is low, such transactions are most likely to be governed by outsourcing (Chang et al, 2009;Jiang et al, 2007;Watjatrakul, 2005). TCE argues that once the accounting tasks entail high intensity of asset specificity, the search for external accountant will be extensive (Nicholson et al, 2006) and contractual negotiations are more argumentative (Espino-Rodríguez et al, 2008).…”

Digitalization of automotive industry – scenarios for future manufacturing

“…Some authors identified negative relationships between outsourcing and indicators like market share when outsourcing reaches a level over a certain optimum [28]. Other studies showed that outsourcing really reduces operational costs [29]. Fuchs and Kirchain showed how wages, yields, downtimes and other parameters are dependent on the location of a factory and demonstrated that with real case data from the optoelectronics industry [30].…”