Production outsourcing and operational performance: An empirical study using secondary data

Kenyon, George N.; Meixell, Mary J.; Westfall, Peter H.

doi:10.1016/j.ijpe.2015.09.017

Cited by 34 publications

(33 citation statements)

References 64 publications

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“…Hartman et al (2017) point out that the revival of vertical integration since the onset of the recent financial crisis is, among others, attributed to firms rethinking their core competencies. Overall, managers have recognized the uncertainty related to the outsourcing decision as a risk in their supply chains (Kenyon et al 2016).…”

Section: (E) Lack Of Knowledge and Uncertaintymentioning

confidence: 99%

Vertical (Dis‑)Integration and Firm Performance: A Management Paradigm Revisited

Kaiser

Obermaier

2020

Schmalenbach Bus Rev

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Vertical disintegration in manufacturing industries has been an increasing trend since the 1990s in many countries. According to a prevailing management paradigm of focusing on core competencies, firms should have vertically disintegrated (i.e. outsourced non-core competencies) to achieve cost savings, enhance competitiveness and improve firm performance. In line with this management paradigm, most empirical studies therefore hypothesized a negative linear relationship between the degree of vertical integration and firm performance, expecting performance to rise when vertical integration decreases.In contrast to previous studies, finding mixed results, we assume an inverted u-shaped relationship, theoretically based on transaction cost economics and the resource-based view of the firm, and by considering advantages and disadvantages of vertical integration, with an optimal level of vertical integration, where firms with a too low degree of vertical integration could achieve higher performance by vertical integration, while firms with too broad vertical integration could achieve higher performance by vertical disintegration.With respect to our data based on a sample of 434 German manufacturing firms between 1993 and 2013 we find a decreasing trend of vertical integration over time. Applying multiple regression analysis, our findings suggest a positive, but diminishing relationship between the degree of vertical integration and financial performance. These two findings describe a paradox of vertical disintegration. The decreasing trend mainly emerges because lower performing firms outsourced their

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Section: (E) Lack Of Knowledge and Uncertaintymentioning

confidence: 99%

Vertical (Dis‑)Integration and Firm Performance: A Management Paradigm Revisited

Kaiser

Obermaier

2020

Schmalenbach Bus Rev

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“…For example, with an advanced configuration system and an elaborate modular architecture, BMW can produce and deliver its customized cars in only twelve days at a competitive cost position [9]. Cost was an important dimension in prior operation management studies [8,24,44] and is used to measure operational efficiency [9,45]. Operational efficiency refers to a firm's ability for cost and time saving, while cost-based efficiency consists of quality costs, engineering costs, and manufacturing costs, and time-based efficiency is associated with the speed to deliver products [9].…”

Section: Efficiency and Financial Performancementioning

confidence: 99%

“…In addition to responding to market demands and adapting to customized requirements [24], operational delivery requires firms to deliver orders in a specified time or faster than their competitors [8]. Indicators, such as the lead time [44,[50][51][52], on-time delivery rate [25,44,51] and after service [51], are widely used to measure operational delivery. For instance, the lead time is defined as the time that elapses between the receipt of a customer's order and the delivery of the goods [52].…”

Section: Delivery and Financial Performancementioning

confidence: 99%

“…For instance, the lead time is defined as the time that elapses between the receipt of a customer's order and the delivery of the goods [52]. A higher on-time delivery rate shows that fewer delays occur in both receiving the customer's order and delivering the completed orders to the customers [44]. In this study, we use lead time to measure firms' delivery ability and adopt Rumyantsev and Netessine's proxy definition of lead time: the average number of days of account payable outstanding.…”

Section: Delivery and Financial Performancementioning

confidence: 99%

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The Sustainable Effect of Operational Performance on Financial Benefits: Evidence from Chinese Quality Awards Winners

Liu

Zhong

et al. 2020

Sustainability

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Quality management practices have become increasingly important as firms seek to obtain quality certifications to dominate markets. To date, adequate research evaluating the effects of quality management is lacking. In this work, we used Chinese quality awards to evaluate a firm's quality level. A PSM-DiD (propensity score matching and difference-in-difference) model describing the relationship between quality award effects and financial benefits in terms of return on assets was developed. We further used a hierarchical regression to examine the influence of operational performance on financial benefits. The results show that quality awards cannot assure their winners a higher return on asset. Indicators of operating performance, such as less lead time and higher inventory turnover, can significantly enhance firms' profitability. The moderating effects of operational performance suggest that firms may focus on how to translate quality management practices into business improvement. This study also contributes to the operation management literature by describing how firms need outstanding financial performance for sustainable development and continuous improvement.Sustainability 2020, 12, 1966 2 of 23 for Just-in-Time (JIT) and Six Sigma, respectively, their products still suffer from serious quality-related problems [7].In addition, operational performance is considered to play an important role in quality management practices. Operational performance is defined as the strategic dimensions of competing firms and consists of operational level indicators, such as flexibility and delivery [8]. The results of quality management systems are also shown in operational levels. However, few studies have explored the effects of operational performance on financial benefits. In addition, researchers may merely consider one dimension of operational performance, such as efficiency [9] or inventory [10]. These studies failed to provide a complete description of the influence of operational performance on financial benefits.This study aims to fill the above research gaps by answering the following two questions: (1) How do quality management practices affect firms' financial benefits? (2) What is the relationship between operational performance and financial benefits?We use quality award winners as the research samples and examine whether these firms can obtain a higher return on assets than their counterparts. The results show that the awarded firms could not achieve significant improvement and that the effects of the awards are not obvious. In addition, we explore the impact of operational performance on the return on assets. The findings demonstrate that less lead time and a higher inventory turnover can enhance the financial benefits. Additionally, decreasing the operating costs and tracking sales more closely can improve the return on assets. Besides this, we also find that shorter lead time and larger inventory turnover can positively moderate the impact of quality awards on the ROA.This study contributes to previous rese...

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“…With the purpose to achieve greater flexibility in many areas of activity and in order to face the complexity of the current business environment, firms have tended to implement reforms in their systems, structures, and other organizational aspects, as well as to undertake a variety of initiatives to improve financial return and incomes, such as the establishment of organizational matrixes, networks tied together by temporary relationships, cooperation and outsourcing (Kenyon, Meixell & Westfall, 2016;Vasconcelos & Ramirez, 2011). In this way, many firms decide to outsource some policies designed to maximize organizational integration, employee commitment, flexibility and quality of work (Guest, 1987).…”

Section: Introductionmentioning

confidence: 99%

Human resource management outsourcing in Spanish firms: Evolution over time and implication for devolution

Gottardello

Valverde

2018

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Purpose: The paper aim to explore the evolution in the use of HRO in Spanish firms, and determine the differences in the degree of implementation of HRO since 1999HRO since until 2014, and also analyze the relationship between HR outsourcing and devolution of HR responsibilities to line managers in Spanish organizations.Design/methodology: This paper combines quantitative and qualitative methods. Namely the article is based on international Cranet HRM survey data collected from private and public organizations and also interviews with HR external providers. Findings:The analysis of developments, based on the Cranet surveys and interviews with HR external providers shows that during the past few years there has been an increasing use of HRO in parallel with the tendency to devolve more HR responsibility to line managers. Research limitations/implications:The main limitation of this research is the limitation of data about reasons for devolution that the CRANET questionnaire provides. However, the interviews carried out enrich the survey data with qualitative results. Practical implications:The findings can be used to guide management teams in outsourcing and devolution decisions to maximize benefits to their organizations. Originality/value:This paper is about the evolution of HRO in Spain as a European Union country where published research on HRO and also its implications is relatively limited. The originality of this paper is mainly the involvement of line manager in the outsourcing process which have been poorly analyzed until now.

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Production outsourcing and operational performance: An empirical study using secondary data

Cited by 34 publications

References 64 publications

Vertical (Dis‑)Integration and Firm Performance: A Management Paradigm Revisited

Vertical (Dis‑)Integration and Firm Performance: A Management Paradigm Revisited

The Sustainable Effect of Operational Performance on Financial Benefits: Evidence from Chinese Quality Awards Winners

Human resource management outsourcing in Spanish firms: Evolution over time and implication for devolution

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