The outsourcing of primary activities: theoretical analysis and propositions

There is a considerable literature comparing the virtues of markets and hierarchies as alternative governance structures for economic transactions. But governance decisions are not simple dichotomous choices, and there has been increasing recent interest in the `swollen middle of hybrid organisational forms that combine market and hierarchical elements. One such hybrid is outsourcing, which has become a topic of considerable contemporary interest both in business circles and within the academic literature. The main contribution of this paper has been to combine the insights of resource dependency theory, the resource-based view of the firm, and transaction cost economics to provide both an explanation for the outsourcing of primary activities and a set of testable propositions about firms propensities of outsource