Outsourcing congruence with competitive priorities: Impact on supply chain and firm performance

Abstract The growth of outsourcing has led outsourcing strategies to become an increasingly important component of firm success (Gottfredson et al., 2005). While the purported goal of outsourcing in supply chains is to derive a competitive advantage, it is not clear whether the outsourcing decisions of firms are always strategically aligned with their overall competitive strategy. In this paper we evaluate the degree of congruence (fit or alignment) between a firm's outsourcing drivers and its competitive priorities and assess the impact of congruence on both supply chain performance and business performance, using empirical data collected from manufacturing business units operating in the United States. We find outsourcing congruence across all five competitive priorities to be positively and significantly related to supply chain performance. We also find the level of supply chain performance in a firm to be positively and significantly associated with the firm's business performance.