A satisficing model of outsourcing

Purpose – To develop a prescriptive model that provides effective guidance in the early stages of outsourcing processes, while taking into the decision‐makers' bounded rationality. Design/methodology/approach – Provides an overview of existing prescriptive decision models for outsourcing based on literature review. Contrasts these models with empirical accounts of outsourcing including two case‐studies of outsourcing of logistics activities. Discusses and explains discrepancies from the point of view of literature on bounded rationality and satisficing. Develops a conceptual decision model based on the principles of satisficing. Findings – That there appear to be discrepancies between many of the prescriptive outsourcing models in the literature and the processes observed in practice. That satisficing concept provides a useful explanation of these discrepancies and useful design principles for developing more realistic prescriptive outsourcing decision models. Research limitations/implications – The model developed in this paper constitutes a first step and its details must be worked out and investigated in more detail. In that respect, specific suggestions for further research are included in the paper, e.g. regarding the potential of methods and techniques from operations research in certain parts of the model. Practical implications – Explains discrepancies between existing outsourcing decision models and outsourcing processes in practice – in particular regarding the practice of outsourcing (combinations of) logistics activities. Offers the basis for realistic decision guidance in outsourcing processes. Originality/value of the paper – This paper is one of first which presents an outsourcing model that explicitly incorporates satisficing principles.