Rethinking Outsourcing: Balancing Competitive Advantage and Industry Interdependence

Companies are reassessing outsourcing strategies in response to heightened competition, including COVID-19 impact. They are seeking ways to optimize competitive advantage through outsourcing while addressing concerns about dependence on suppliers. Our research reveals that industries that utilize outsourcing often do so to enhance their productivity levels, tapping into the productivity of supplier industries. The outsourcing rate plays a critical role in the client industry's capacity to focus on its core and essential activities and shield them from the influence of the supplier industry. In scenarios of low outsourcing rates, client industries typically engage in outsourcing when faced with low competition,