Understanding the effects of outsourcing: unpacking the total factor productivity variable

Ben Kitcher, Ian P. McCarthy, Sam Turner, Keith Ridgway

Research output: Contribution to journalArticle

13 Citations (Scopus)

Abstract

Research on why firms should outsource and how they should do it has proliferated in the past two decades, but few consistent findings have emerged concerning the benefits of outsourcing. We argue that this is in part due to the lack of an adequate framework for measuring the effects of outsourcing. To address this, we present such a framework based upon the Cobb-Douglas productivity function. We explain how our framework can be used to unpack one component of the Cobb-Douglas productivity function, the 'total factor productivity', which represents the other numerous sub-variables that affect outsourcing productivity, beyond the capital and labour expenditures. We also demonstrate the framework using a simple illustrative example.

Original languageEnglish
Pages (from-to)308-317
Number of pages10
JournalProduction Planning and Control
Volume24
Issue number4-5
Early online date2 Feb 2012
DOIs
Publication statusPublished - 30 Apr 2013

Keywords

  • aerospace
  • Cobb-Douglas
  • Ishikawa diagram
  • manufacturing
  • outsourcing
  • total factor productivity

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