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Interpretation of relative coefficient weights

Taking exceptional note of ? coefficients in ? model, many interesting relationships need interpretation. First, ? coefficient for production cost advantage (. 696) is about six times as large as that of transaction costs (-. 115). ? relative strength of these links suggests that ? effect of simple costs on ? choice to outsource is far greater than that of transaction costs, even though both were significant.

What this implies is that while managers, in general, consider both production and transaction costs in their decision making, production costs are ? overwhelmingly dominant factor. ? main issue is whether ? production cost advantage factor is weighed more heavily by managers than ? transaction cost factor. ? sign of ? coefficient, i. e. , whether ? factor is an incentive or an impediment, is not at issue since ? data gathered from ? respondents represents in itself ? importance placed on these factors.

Therefore, ? path coefficients might be interpreted as suggesting that managers place six times more emphasis on production costs than on transaction costs in their outsourcing decisions. Certainly, if ? responses of managers on production and transaction cost measures are averaged and then compared across organizations that were mainly in sourcing versus those mainly outsourcing IT, some very revealing statistics emerge.

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Managers who are mainly in sourcing IT are more possible to consider ? friction of ? transaction (mean = 5.30) than are those who have made ? decision to outsource heavily. This is in stark contrast to production costs where those who are significantly invested in outsourcing place ? large importance on comparative production cost analysis (mean = 5. 26). What is also revealing is that each group of managers seems to heavily downplay costs that might weigh against their decision: production costs for those in sourcing (mean = 2. 75) and transaction costs for those outsourcing (mean = 4. 38). These findings are troubling.

If Williamson is correct, and there is every reason to believe that he is, managers should be considering transaction costs in every outsourcing decision, not just frequently enough for ? overall findings to show significant relationships. Managers who have made ? decision to invest heavily in outsourcing should be even more sensitive to ? value of transaction cost analysis than those who have not made this decision. That they might not be suggests that managerial decisions are far from ? normative ideal represented in theory and in ? outsourcing literature.

Attitude towards BPO ? positive attitude towards BPO is assumed to positively influence ? intention to increase ? level of BPO. Based on TRA, we define ? attitude towards BPO as ? overall evaluative appraisal, made by ? manager who is responsible for ? business procedure, of having that procedure outsourced to an external service provider. ? relationship between attitude and intention is based on TRA, which states that ? beliefs about an outcome shape ? attitude towards performing ? behaviour.

Attitude, in turn, influences ? intention to perform ? behaviour and, ultimately, influences ? behaviour itself (Wixom and Todd 2005). So, ? more positive ? attitude towards BPO, ? greater ? intention to increase ? level of BPO will be. This relationship has been empirically tested in numerous studies, especially those focusing on ? Technology Acceptance Model (Davis, Bagozzi and Warshaw 1989; Adams, Nelson and Todd 1992; Taylor and Todd 1995). Intention to Increase ? Level of BPO ? intention to increase ? level of BPO is ? ultimate dependent variable in our model.

We regard it as ? manager’s expression of support for ? outsourcing of ? procedure she/he is responsible for, barring unforeseen events (Ajzen and Fishbein 1980). We explicitly refer to an increase in ? level of BPO instead of asking for overall outsourcing of ? business procedure, as pre-tests showed that numerous managers have already outsourced smaller tasks of their processes. As laid out above, based on TRA, ? positive attitude towards BPO is expected to positively influence ? intention to increase ? level of BPO. This relationship was successfully tested in ? studies mentioned in section .

We are aware of ? difficulties that arise when predicting an actual outcome using ? intended behaviour, for example possible changes in influential factors in ? time between indicating an intention and performing ? behaviour (Ajzen and Fishbein 1980). So we regard intention predominantly as ? control variable to assess whether our research model accurately predicts changes in ? intention to increase ? level of BPO. As Ajzen and Fishbein (1980, p. 5) put it: “(There will not) always is ? perfect correspondence between intention and behaviour. “

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