The Influence of Institutional Constraints on Outsourcing
Journal of Accounting Research, Forthcoming
45 Pages Posted: 24 Mar 2010
Date Written: March 18, 2010
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: Suggested Citation