ABSTRACT
This research investigated the association between outsourcing practices and corporate performance of Manufacturing Companies in Port Harcourt, Nigeria. Human resource service, financial service and production service were used as empirical referent of the predictor variable while profitability and market share were used as measures of the criterion variable. With respects to the conceptual and operational framework, the research answered six research questions and test six hypotheses in order to ascertain the degree of positive linear association between outsourcing practices and corporate performance. Resource Based Theory (RBT) and Transaction Cost Theory (TCT) were the sociological baseline theories adopted as the theoretical foundation for the study. Cross-sectional survey research design was used for the study. A total ofseventy three (73) respondents were drawn from a population of ninety(90)existing managerial employees across the eighteen (18) selected Manufacturing Companies in Port Harcourt, using Krejcie& Morgan (1970) table for determining corresponding sample size for a given population and the Krejcie& Morgan (1970)formula for sub-sample size calculation for individual organization. The researcher collected data on a macro level unit of analyses using a five point Likert Scale questionnaire tattled: “Questionnaire on Outsourcing Practices and Corporate Performance of Manufacturing Companies in Port Harcourt (QOPCP)”.The Questionnaire was validated through face validity, content validity and construct validity while Cronbach alpha was used to test for reliability of the research instrument. The data collected was analyzed at different levels. For primary level data, descriptive analytical tools were used and for secondary level data, inferential statistical tool [i.e. Pearson Product Moment Correlation Coefficient (PPMCC)] was used. These analyses were conducted using a computer software package called statistical package for social sciences (SPSS) version 20.0. The result of the findings revealed that human resource outsourcing service; financial outsourcing service and production outsourcing service give rise to corporate profitability and market shares respectively. Based on empirical findings, the researcher then concluded that outsourcing practices significantly and positively affects corporate performance of manufacturing companies in Port Harcourt.The researcher then recommends that: Manufacturing Companies in Port Harcourt, Nigeria should stimulate human resources outsourcing in order to achieve profitability; Manufacturing Companies in Port Harcourt, Nigeria should encourage human resources outsourcing in order to ensure increased market share; Manufacturing Companies in Port Harcourt, Nigeria should inspire financial outsourcing services in order to guarantee increased profitability; Manufacturing Companies in Port Harcourt, Nigeria should inspire financial outsourcing services in order to enhance increased market share; Manufacturing Companies in Port Harcourt, Nigeria should persuade Production outsourcing services in order to warrant increased profitability and Manufacturing companies in Port Harcourt, Nigeria should stimulate Production outsourcing services to ensure increased market share.
INTRODUCTION
The current recession in Nigeria economy is changing business dynamics and operational models. Restructuring or/and rightsizing is becoming the order of the day. A common activity in restructuring is the identification and separation of core from no-core activities. Subsequently, processes are built around both activities to support overall enterprise goals (Uwadiae, 2017). To achieve a functional, efficient and cost effective organization, it is now common knowledge that certain processes are better outsourced to a service provider than managed internally.Outsourcing business process is a management practice that involves engaging a third party usually known as service providers to manage certain process and for activities of the company. Outsourcing is a common practice and a familiar concept. Over the years, both big and small companies engage the services of other firms to handle tasks that would normally have been performed within the organization. Sometimes, it is usually the non- core functions that are outsourced to enable management focus on core business activities (Uwadie, 2017).
At other times, management would outsource an important an important function where it does have the expertise or the financial capacity to run efficiently, provide the decision advances the achievement of overall objective. However, despite the world-wide acceptance of Outsourcing practices, many companies are yet to fully understand and tap into the numerous benefits of outsourcing. In addition to benefits discussed in details in the foregoing, Outsourcing helps to achieve sustainable efficient corporate performance thereby increasing revenues, enhancing quality service delivery to customers, reduce exposures to business risks, increase manpower efficiency and optimize processes.
With the current economic situation, the dream of every management is to operate at maximum efficiency and at the lowest possible costs without hurting the bottom-line. Outsourcing services help companies to access specialized services that can increase revenue and reduce operating costs. Outsourcing gives access to the best expertise in the relevant field without incurring costs of maintains such expertise within the organization. Organizations tend to protect their profitability by diversifying, and, to improve flexibility and creativity, most companies establish strategic decisions to focus on the firm’s core business in order to identify processes that are critical to make outsourcing decisions.
According to Corbett (2004), outsourcing is a management tool that is used to move an organization away from the traditional vertically integrated, self-sufficient structure; one that is increasingly ineffective in today’s hyper-competitive, performance driven environment. Through outsourcing, the organization moves towards a business structure through which it is able to make more focused investments in the areas that provide its unique competitive advantage. As stated by Mullin (1996), outsourcing has only been officially considered as a prominent business strategy since 1989. Many organizations are not totally self-sustained and would usually outsource certain functions for which they do not own internal competencies.
Delivering quality service to customers/clients and ensuring operational efficiency is one of the major focuses of management. Outsourcing some organizational functions will help management to focus on other functions in order to achieve competitive advantage. Outsourcing also helps in achieving and enjoying certain expertise that may be too expensive to maintain internally.
The cost of hiring, training and maintaining certain manpower may sometimes be higher than the benefits of engaging full time resources for the intended period. Outsourcing would enable management to retain and focus on only the needed manpower relevant to the core operations of the company thereby saving costs. Outsourcing processes, functions and activities that are not related to the core operations of the company will enable management to channel their energy and focus more on achieving strategic goals and objectives.
This way, resources and time will be focused on value adding activities and core competencies. Outsourcing gives management free time to carry out their day-today core activities with less focus on those unimportant tasks. There is enough time to think strategically on ways to position the company for greater heights. Outsourcing therefore improves productivity. With increase in Outsourcing of business processes there is enough time available for formulating strategies, exploring new areas for earning revenues, and focusing on their customers. This improves the-overall performance of the organization.
Statement of the Problem
An extensive amount of outsourcing research has been conducted on the management of outsourcing practices. Especially, researchers have focused their attention on outsourcing related to governance practices and mechanisms such as contracts, relationships and sanctions. These practices are supposed to increase the likelihood of successful outsourcing practices and improve performance of the host company. This is rarely the case as observed elsewhere. Handley & Benton (2009) for example posited that a more complete contract positively impacts outsourcing performance in two ways; First, through reducing risk and uncertainty by way of more detailed specifications of obligations and procedures and, second, through enhancing inter-firm resource efficiency through coordination provisions. Because the empirical studies that have explored the importance of complete contracts for the success of outsourcing practices have shown mixed findings.
Handley & Benton (2009) concluded that more research is needed in manufacturing sector to investigate the influence of environmental factors such as risk and supporting enforcement practices in outsourcing practices. Despite the growing trend of logistics outsourcing, there are very limited sources of literature on outsourcing practices in Nigeria. Suffice to mention that there are limited studies on outsourcing. Hence, it is crucial in the Nigerian context to understand the extent of outsourcing practices in this country and the relevant trends. In this study, we evaluate the factors of outsourcing practices that contribute to the corporate performance and help improve the dismal situation of outsourcing practices in the manufacturing sector in Nigeria.
TABLE OF CONTENT
Reference code: MG024
_____________________________________
Reference code: MG024
Does the work meet your requirements?
Then Click the Order Now Button Below
No comments:
Post a Comment