Antecedents of Business Process Outsourcing in Manufacturing Plants

Abstract

between investments in information technology, manufacturing plant strategies and their impact on business process outsourcing (BPO) in manufacturing plants. Using survey data from US manufacturing plants, we develop a theoretical framework for studying the antecedents of BPO at the plant level. Our analysis suggests that the level of information technology (IT) investments, as a percentage of plant sales, is positively associated with the outsourcing of plant production activities. We also find that plants with higher levels of in-house software infrastructure are less likely to outsource plant support business processes. Furthermore, we find that plant manufacturing strategies and other plant-specific characteristics, such as production volume and the degree of worker unionization, also have a significant impact on the types of business processes that are outsourced. Managerial and research implications of our research into the antecedents of BPO are summarized.