Outsourcing occupational safety and health: an analysis of the make or buy decision

This paper investigates the factors affecting the outsourcing decision of occupational safety and health (OSH) services. I posit several hypotheses following the three main approaches to the make or buy question: (1) the transaction cost theory, (2) the resource-based view of the firm, and (3) the behavioral decision-making framework. The empirical analysis draws on microdata from 3,047 Spanish firms that are legally obliged to provide organized OSH activities but free to choose the option to outsource. Results show that informational symmetries and increasing transaction costs mainly explain the decision to outsource the OSH activity. Organizational behavior variables, such as management commitment to safety and workers' representation, also relate to the outcome of the decision but not necessarily as hypothesized. Finally, I did not generally observe the strategic value of safety in informing the make or buy decision. (C) 2009 Wiley Periodicals, Inc