The Impact of Participative Management on Employee Performance (a Case Study of Annamco).

5407 Words 22 Pages
The Perceived Impact of Outsourcing on Organizational Performance

Dean Elmuti, Eastern Illinois University


In todays world of ever increasing competition, organizations are forced to look for new ways to generate value. The world has embraced the phenomenon of outsourcing and companies have adopted its principles to help them expand into other markets (Bender 1999). Strategic management of outsourcing is perhaps the most powerful tool in management, and outsourcing of innovation is its frontier (Quinn 2000).

Outsourcing is a management strategy by which an organization delegates major, non-core functions to specialized and efficient service providers, or as Corbett (1999). President of Michael F. Corbett and
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Successful implementation of an outsourcing strategy has been credited with helping to cut cost (Bowersox 1990; Gupta and Zeheuder 1994; Greer, Youngblood and Gray 1999), increase capacity, improve capacity, improve quality (Lau and Hurley 1997; Kotabe, Murray and Javalugi 1998), increase profitability and productivity (Casale 1996; Sinderman 1995), improve financial performance (Crane 1999), lower innovation costs and risks (Quinn 2000), and improve organizational competitiveness (Lever 1997; Steensma and Corley 2000; Sharpe 1997). However, outsourcing does generate some problems. First of all, outsourcing usually reduces a companys control over how certain services are delivered, which in turn may raise the companys liability exposure.

Companies that outsource should continue to monitor the contractors activities and establish constant communication (Guterl 1996). Another big problem with outsourcing comes from the workers themselves as they fear loss of jobs (Malhorta 1997). According to a recent survey 55 percent of outsourcing relationships fail in the first five years. Of these that do manage to stay together, 12 percent are unhappy with their arrangement and regret ever making the deal (Foster 1999).

This study was designed to explore why companies are undertaking outsourcing projects and identifies factors that my facilitate or impede outsourcing projects. This article

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