Does outsourcing moderate the effects of asset specificity on performance? An application in Taiwanese hotels

Abstract

The purpose of this study is to investigate whether the form of governance (outsourcing or insourcing) moderates the relationship between asset specificity and performance. The relationship between asset specificity and performance is analysed, as well as the question of whether the performance determines an increase in outsourcing. The study was carried out in a representative sample of hotels in Taiwan. An analysis was performed of 585 activities pertaining to the main hotel areas. A research model is developed that proposes different hypotheses to test from the perspectives of Transaction Cost Economics (TCE) and the Resource-Based View of the firm (RBV). Moreover, an asset specificity-performance matrix is developed, where the activities are classified by their level of asset specificity and performance. The results indicate that asset specificity has a positive effect on activity performance and non-financial performance. The results confirm that the form of governance moderates the relationship between asset specificity and performance. The findings indicate that an increase in outsourcing is more related to lower activity performance and lower non-financial performance. The results show that these two perspectives complement each other in explaining the moderator effect of outsourcing.