Sourcing practices and boundaries of the firm in the financial services industry

M. Hossein Safizadeh · Joy M. Field · Larry P. Ritzman

48 citations0/0 files storedStrategic Management Journal

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Outsourcing and Supply Chain Management Innovation and Knowledge Management Employer Branding and e-HRM

Abstract

Abstract We investigate sourcing decisions related to the back‐office operations of 108 processes used by financial services companies. Guided by the arguments of transaction cost economics and the resource‐based and knowledge‐based view of organizations, we hypothesize that service customization and volume represent two key drivers of a service company's sourcing decisions. The inherent uncertainty of service customization gives rise to the transaction cost risks of opportunism and holdups and thus favors insourcing. Moreover, the competency gained from performing high‐volume back‐office operations aligns with the tenets of the resource‐based view, which also favors insourcing. The empirical results corroborate these theoretical expectations. Copyright © 2007 John Wiley & Sons, Ltd.

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References

1937The Nature of the Firm 1988SERVQUAL: A multiple-Item Scale for measuring consumer perceptions of service quality 1994A Dynamic Theory of Organizational Knowledge Creation 1996Toward a knowledge‐based theory of the firm 1987The Economic Institutions of Capitalism 1998Social Capital, Intellectual Capital, and the Organizational Advantage 1992Knowledge of the Firm, Combinative Capabilities, and the Replication of Technology 1986The Economic Institutions of Capitalism

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