Connecting strategy‐linked outsourcing approaches and expected performance

Purpose – This study aims to examine the connection between strategy‐linked outsourcing goals and measures of outsourcing performance. The strategies of growth, cost, and differentiation (core competence) are examined in terms of their relationship with goal achievement and cost performance measures. Design/methodology/approach – Regression analysis and ANOVA were applied to survey data collected from 165 purchasing executives. Findings – Findings support a positive relationship between goal intensity for a single strategy and achievement of goals related to that strategy. Findings also suggest that firms with high commitment to growth and cost strategies tend to achieve cost‐related performance at higher levels than firms with a lower commitment to same. Finally, the findings also suggest that firms pursuing a single or dominant strategy achieve lower levels of cost saving performance, as compared with firms pursuing a “balanced” approach that emphasizes two or three different strategies in roughly equal measure. Research limitations/implications – This study relies on very limited performance variables, mainly cost reduction. Additional variables that addressed growth and core competence would provide additional insight on the link between outsourcing and performance. Practical implications – Goal intensity is positively related to higher performance on desired outsourcing outcomes. Firms demonstrated greater success in their ability to pursue multiple outsourcing strategies over firms pursuing a single strategy. Originality/value – The link between strategy and outsourcing performance had not been empirically established.