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Measurement costs and control in outsourcing relationships

Bhimani, Alnoor, Lopes, Alexsandro and De Aquino, Andre Carlos Busanelli (2017) Measurement costs and control in outsourcing relationships. International Journal of Managerial and Financial Accounting, 8 (3/4). pp. 296-318. ISSN 1753-6715

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Identification Number: 10.1504/IJMFA.2016.10002756


Past research suggests that when an organization outsources an activity, its control over the execution of the service is reduced whilst service quality monitoring increases. Little accounting research has been documented on the links between measurement costs and control sharing in contracts entailing the provision of industrial services. We analyse 35 contracts involving 80 non-spot transactions and 749 contract terms at an iron and steel mill in Brazil. The study complements this data with information from 32 interviews. We find that the measurement costs of the contracted services are associated with the complexity of activities and the tightness of control maintenance by the contractor. Where such costs are high, legal contract enforcement and use of extra-contractual coordination mechanisms is low. Additionally, variances between the conceptually expected enforcement mix and that operating in practice is associated with service performance level.

Item Type: Article
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Additional Information: © 2016 Inderscience Enterprises
Divisions: Accounting
Subjects: H Social Sciences > HG Finance
Date Deposited: 14 Dec 2016 09:52
Last Modified: 20 Aug 2021 02:15

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