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Manufacturing outsourcing and its effect on plant performance—lessons for KIBS outsourcing

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Abstract

Despite the proclaimed advantages and popularity of outsourcing manufacturing and knowledge-intensive business services, there are few and mainly contradictory studies of its short- and long-term effects. The main purpose of this paper is to analyze the way in which outsourcing manufacturing and design work relates to performance at plant level. The study is based on a large-scale survey among a representative sample of Swedish engineering plants. The results show no significant effects from outsourcing manufacturing on plant operating performance. The paper further shows that investments in technological and organizational capabilities explain the improvements of performance to a significantly higher extent than does outsourcing. The problems of additional costs and managing dependencies when applying partial outsourcing and separating interdependent key processes provide important insights to the analysis on the effects of outsourcing knowledge-intensive business services (KIBS).

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Authors and Affiliations

  1. Department of Industrial Engineering and Management, University of Gävle, 801 76, Gävle, Sweden

    Lars Bengtsson

  2. Department of Industrial Economics and Management, Royal Institute of Technology (KTH), 100 44, Stockholm, Sweden

    Mandar Dabhilkar

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  1. Lars Bengtsson
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  2. Mandar Dabhilkar
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Correspondence to Lars Bengtsson.

Additional information

The support of VINNOVA, The Swedish Agency for Innovation Systems, and Sparbanksstiftelsen in Söderhamn are gratefully acknowledged.

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Bengtsson, L., Dabhilkar, M. Manufacturing outsourcing and its effect on plant performance—lessons for KIBS outsourcing. J Evol Econ 19, 231–257 (2009). https://doi.org/10.1007/s00191-008-0129-1

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