Evidence from the studies on outsourcing conducted in the late 1980s and early
1990s indicates that organizations turned to outsourcing in an effort to capture cost
savings and gain competitive advantage. Results of later research imply that
organizations are focusing to a greater extent on developing capabilities through
outsourcing to spur value creation and to gain competitive advantage. Hence, the
earlier publications suggest that outsourcing decisions tended to rely on economic
factors, and therefore, the transaction cost view (TCV) had been the dominant
theory to explain outsourcing decisions (Williamson 1979).
On the other hand, some recent studies infer that an organization’s motivation
for outsourcing can be more appropriately explained using the resource-based
view (RBV) rather than TCV. The RBV emphasizes value creation and competitive
advantage for the firm. According to Walker and Poppo (1991), however, a
suitable approach would be a hybrid relationship which combines the economic
aspects of TCV and the relational view of RBV. This hybrid view has been
supported by current research, suggesting that TCV and RBV are complementary
to one another (Hoetker 2005; Jacobides and Winter 2005). Therefore, it is
becoming apparent that an effective understanding of what motivates outsourcing
decisions requires investigation from both the transaction-cost-based and resourcebased
perspectives.