This study aims to integrate perspectives of transaction costs and capabilities to investigate how the configurational fit between outsourcing strategies, asset specificity of projects and the capabilities of general contractors could achieve high outsourcing performance.
Employing fuzzy-set qualitative comparative analysis, this study analyzes 31 outsourcing cases in construction projects to examine outsourcing performance under different combinations of transaction costs and capabilities.
The findings highlight six different but functionally equivalent configurations to high outsourcing performance, which vary according to attributes of projects and capabilities of contractors. Further, this study develops four context-dependent paths that link outsourcing strategies to high outsourcing performance: leading practitioner, collaborative manager, partnership dependent, and struggler.
How do contractors in construction projects navigate outsourcing practices to high performance? This study provides a configurational perspective to make outsourcing strategy decisions. Based on the firm’s capabilities and project asset specificity, contractors are encouraged to select from six different but functionally equivalent combinations and thereby four outsourcing strategies, namely leading practitioner, collaborative manager, partnership dependent, and struggler, to achieve high outsourcing performance.
This study contributes to the body of knowledge by offering a holistic perspective that integrates production and transaction costs to analyze contractors’ outsourcing strategies, contributing to the integration of the transaction cost perspective and capability perspective.
