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Firm-level determinants of Business Process Outsourcing Decisions

Firm-level determinants of Business Process Outsourcing Decisions
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Author(s): Markus Fritsch (Johann Wolfgang Goethe University, Germany) and Kim Wüllenweber (Johann Wolfgang Goethe University, Germany)
Copyright: 2007
Pages: 5
Source title: Managing Worldwide Operations and Communications with Information Technology
Source Editor(s): Mehdi Khosrow-Pour, D.B.A. (Information Resources Management Association, USA)
DOI: 10.4018/978-1-59904-929-8.ch091
ISBN13: 9781599049298
EISBN13: 9781466665378

Abstract

Although there are numerous contributions why firms outsource IT activities, research on Business Process Outsourcing (BPO) decisions is scarce. As BPO might affect outsourcer’s core, decisions are likely to be taken on firm level. We therefore aim at answering the following research question: What is the impact of firm-level characteristics on the decision to outsource business processes? Using pub-licly available data we analyze BPO decisions in the German banking market. Our findings show that BPO is perceived to provide significant strategic value for outsourcers. We provide evidence that large and diversified banks with low cost efficiency are more likely to outsource. Contradictory to prior research findings we further demonstrate that more activities are sourced out, if outsourcer’s profit increases. Further research is suggested to explain BPO success using publicly available data.

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