The Influence of Institutional Constraints on Outsourcing

Journal of Accounting Research, Forthcoming

45 Pages Posted: 24 Mar 2010

See all articles by Ramji Balakrishnan

Ramji Balakrishnan

University of Iowa - Department of Accounting

Leslie Eldenburg

University of Arizona

Ranjani Krishnan

Michigan State University - Department of Accounting & Information Systems

Naomi S. Soderstrom

University of Melbourne

Date Written: March 18, 2010

Abstract

Drawing on transaction cost economics and institutional theory we argue that the effects of institutional constraints on the transaction costs of outsourcing vary systematically with the type of service outsourced and the ownership structure of the outsourcing firm. Using data from hospitals, we demonstrate that these effects lead to higher extent of outsourcing of non-clinical over clinical services, which is also responsive to cost pressures from managed care. Further, the effects of ownership structure and associated governance mechanisms on institutional constraints are reflected in the empirical results as cross sectional variations in the extent to which outsourcing is invoked as a response to cost pressures by hospitals of different ownership.

Keywords: Institutional constraints, transaction costs, outsourcing

JEL Classification: I11, L33, M41

Suggested Citation

Balakrishnan, Ramji and Eldenburg, Leslie G. and Krishnan, Ranjani and Soderstrom, Naomi S., The Influence of Institutional Constraints on Outsourcing (March 18, 2010). Journal of Accounting Research, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1574404

Ramji Balakrishnan

University of Iowa - Department of Accounting ( email )

108 Pappajohn Business Building
Iowa City, IA 52242-1000
United States
319-335-0958 (Phone)
319-335-1956 (Fax)

Leslie G. Eldenburg (Contact Author)

University of Arizona ( email )

McClelland Hall Room 301H
Tucson, AZ 85721
United States
520-621-4585 (Phone)
520-621-3742 (Fax)

Ranjani Krishnan

Michigan State University - Department of Accounting & Information Systems ( email )

270 North Business Complex
East Lansing, MI 48824-1034
United States
517-353-4687 (Phone)
517-432-1101 (Fax)

Naomi S. Soderstrom

University of Melbourne ( email )

Victoria
Melbourne, 3010
Australia

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