Outsourcing impact on manufacturing firms’ value: Evidence from Japan
Bin Jiang, James A. Belohlav, Scott T. Young
Journal of Operations Management · 2007 · Volume 25 · Issue 4
DOI: 10.1016/j.jom.2006.12.002
Abstract
Previous studies on the effects of outsourcing have relied largely on anecdotal evidence, non-financial metrics or accounting-based measures that ignore intangible value. This study views outsourcing effects from its future revenue-generation potential, using market value. The relation between firms’ market valuation and outsourcing decisions is investigated using a cross-sectional valuation approach. Results based on Japanese manufacturing industries data from 1994 to 2002 indicate that core business-related outsourcing, offshore outsourcing, and shorter-term outsourcing have positive effects on outsourcing firms’ market value. In contrast, non-core business-related outsourcing, domestic outsourcing, and longer-term outsourcing are not found to enhance firm value.
Keywords
Purchasing, Financial/economic analysis, Empirical research methods
Enable JavaScript for citation tools and additional paper interactions.