Outsourcing, Product Quality and Contract Enforcement

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Outsourcing, Product Quality, and Contract Enforcement

Does outsourcing compromise product quality? Does sound contract enforcement alleviate this concern? We offer a simple model to illustrate how outsourcing leads to lower product quality and how contract enforcement helps mitigate this problem. These theoretical predictions are borne out of a survey of 2,400 firms in China conducted by the World Bank in 2003.

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Despite the phenomenal growth in outsourcing of various business functions like Enterprise Systems outsourcing, IT outsourcing, and Business Process outsourcing, there has been relatively less attention given to the high-risk area of outsourcing contracts. In this regard, contract has been the conventional medium for governing outsourcing relationships. This study aims to bring forward the impo...

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ژورنال

عنوان ژورنال: SSRN Electronic Journal

سال: 2009

ISSN: 1556-5068

DOI: 10.2139/ssrn.1495666