Explicating the mediating role of Outsourcing Strategy: Operations Management Practices affecting Capacity Expansion Decision

Abstract

Understanding the relationship between operations management practices, capacity expansion decisions, and the mediating role of outsourcing is essential for organizations seeking to optimize their operations in dynamic market environments. Therefore, this study is aimed to empirically evaluate the relationship between operations management practices and capacity expansion decision with mediating role of outsourcing strategy. Pharmaceutical industry was targeted to gather respondent’s data in order to statistically evaluate. 175 respondent’s data from 18 pharmaceutical companies were incorporated and examined using SmartPLS 4.0. As a result, operations management practices play a crucial role in evaluating the need for capacity expansion, optimizing processes, analyzing risks, and aligning operations with strategic goals. However, the outsourcing strategy acts as a mediating factor that influences the final decision. The outsourcing strategy considers cost-effectiveness, flexibility, core competency focus, risk management, and strategic alignment. By incorporating the outsourcing strategy, organizations can make informed decisions that maximize operational efficiency and support long-term growth objectives.