Outsourcing Failure and Reintegration: The Influence of Contractual and External Factors

37 Pages Posted: 17 Jul 2013

See all articles by Sandro Cabral

Sandro Cabral

Insper Institute of Education and Research; Federal University of Bahia (UFBA)

Bertrand V. Quelin

HEC Paris - Strategy & Business Policy

Walmir Maia

Federal University of Bahia (UFBA)

Date Written: June 1, 2013

Abstract

This paper discusses the reasons that drive organizations to interrupt outsourcing, reverse their previous decision, and then reintegrate activities formerly delegated to providers. Contractual approaches, mainly derived from Transaction Costs Economics, offer some plausible explanations for reintegration originating from outsourcing failure. These explanations are mainly related to asset specificity, poor contractual design, and deficient monitoring. The study of a real case of outsourcing interruption in industrial maintenance illustrates these different factors. However, some other determinants might complement the contractual and strategic background, namely bandwagon behavior and institutional pressure exerted by external actors. Finally, we propose an integrative framework that combines micro- and macro-levels of organizational analysis. We argue that some existing complementarities between the different theories we use here can shed some light on real organizational problems. Besides the implications for theory, our work can help managers to understand the dynamics of organizational boundaries, thus allowing them to make better choices in both outsourcing and reintegration decisions.

Keywords: reintegration, outsourcing failure, contracting, isomorphism

Suggested Citation

Cabral, Sandro and Quélin, Bertrand V. and Maia, Walmir, Outsourcing Failure and Reintegration: The Influence of Contractual and External Factors (June 1, 2013). HEC Paris Research Paper No. SPE-2013-991. Available at SSRN: https://ssrn.com/abstract=2294863

Sandro Cabral (Contact Author)

Insper Institute of Education and Research ( email )

R Quata 300
Sao Paulo, 04542-030
Brazil

Federal University of Bahia (UFBA) ( email )

Av. Reitor Miguel Calmon, s/n
Vale do Canela
Salvador, Bahia
Brazil

Bertrand V. Quélin

HEC Paris - Strategy & Business Policy ( email )

Jouy-en-Josas Cedex, 78351
France

HOME PAGE: http://www.hec.fr/quelin

Walmir Maia

Federal University of Bahia (UFBA) ( email )

Av. Reitor Miguel Calmon, s/n
Vale do Canela
Salvador, Bahia
Brazil

Register to save articles to
your library

Register

Paper statistics

Downloads
167
Abstract Views
1,519
rank
176,450
PlumX Metrics