The CEO's Decision-Making Process Model on Service Offshore Outsourcing

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Mark Yang
Department of Information, Operations and Technology Management College of Business Administration
The University of Toledo
2801 W. Bancroft St.
Toledo, Ohio, USA 43606
Phone: (419) 787-3453
Fax: (419) 530-2290
Jeen Lim
Department of Marketing and International Business
College of Business Administration
The University of Toledo
2801 W. Bancroft St.
Toledo, Ohio, USA 43606
Phone: (419) 530-2922
Fax: (419) 530-4610
This present study attempts to fill the gap through providing the CEO’s decision-making process model with regard to service offshore outsourcing activities which becomes important strategy to maintain firm’s competitive advantage. Arguably, the CEO is the main domain of decision making authority on such important agenda of the firm as service offshoring. The research model includes 1) key antecedents of service offshoring deriving from various outsourcing literatures, 2) CEO’s propensity (attitude and subjective norm), intention and behavior, and 3) regulatory environmental factors. As a theoretical base, Theory of Reasoned Action (TRA) will be used. Managerial implication as well as future research direction will be provided. Keywords: Offshore outsourcing, Key Antecedents of Service offshoring, Decision-making process, Chief Executive Officer (CEO), Theory of Reasoned Action (TRA) INTRODUCTION

Recently, service offshoring has brought the tremendous increasing attention and concern to both practitioners and researchers due to the rapidly-changing structure of the U.S. employment and the growing importance of its significant impact on the U.S. economy. This trend has been more and more visible due to “the rise of globally integrated knowledge economy”, which has both good and bad impact on the U.S. economy: it may be good because U.S. firms may enjoy the cost benefits, utilizing large best pools with relatively low cost; it may be also bad because they are likely to lose control of their core businesses or lose white-collar jobs of the U.S. counterpart. Up to now, large body of research has addressed the various issues of service offshoring. However, current scholarly works tend to be fragmented and especially, few attempted to examine inside of firm’s decision-making process with regard to service offshore outsourcing. Such decision-making process model may be useful to contribute to the previous - 4491 -

body of research on service offshore outsourcing in that to my knowledge, very few papers produced from top management perspective (except [47]) and this process model may help top management, esp. Chief Executive Officer (CEO) avoid to make hasty decision, resulting in saving huge economic losses. This paper is organized as follows. The following section provides literature reviews. The third section presents the research model which includes such variables as 1) key antecedents which are major criteria for determining service offshoring drawn from the extant literatures on outsourcing activities; 2) CEO’s propensity; 3) CEO’s Intention and Behavior; and 4) regulatory environment (moderating variable). Series of research propositions are developed. The conclusion section provides the managerial implication as well as future research direction.

The role of top management on affecting firms’ strategy choices and performance has been well-documented [13] [14] [40] [9] [15]. Quality of leadership of top management, esp. CEO, determines the fate of the firm. For example, under Jack Welch’s leadership General Electric Company (GE) within 20 years has been drastically transformed into one of the largest and most admired company with $ 500 billion’s market value from a market capitalization of $12 billion. It shows the critical role of CEO in advancing the firm in terms of...
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