Managerial Accounting Paper
The term outsourcing comes with many preconceived connotations, both positive and negative, thus the study of the mechanisms for effective use of outsourcing as a business development tool is also clouded with these perception issues. Much of the academic study of outsourcing revolves around trying to determine if it is a good thing or a bad thing, whether it is harmful to the local workforce or beneficial to globalization, and whether the average company has an obligation, moral or otherwise, to consumers in its home town, state or country to use labor within that region. None of those topics are pertinent to the discussion here and are therefore being immediately excluded. That is not to say that these are not pertinent and valid area of research in their own right, only that they are tangential to this discussion herein. This review will focus on outsourcing as it relates to control mechanisms within company development. Specifically, this paper will attempt to identify the link between control mechanism and outsourcing within the framework of managerial accounting.
Outsourcing, literally, is the use of an external source to perform a business function instead of having an employee do it using company equipment. In its simplest form, outsourcing is paying a cleaning firm for office maintenance rather than hiring a janitor. The complexity skyrockets with the complexity of the task being outsourced. In a derogatory sense, outsourcing is often used as a synonym for offshoring, the process of contracting with a firm in another country for the provision of some goods or services. For use in this discussion, control mechanisms are the means by which power is divided within a business relationship and can be either formal or informal. Because we are speaking largely of inter-firm control mechanisms, we will place great emphasis on the informal means of control and how those are impacted by the formal control mechanisms.
Within that framework this paper will attempt to discuss the correlation between outsourcing and control mechanisms. Firstly, we fix our attention on the outsourcing strategy of a company. Though outsourcing has become popular in management (accounting) literature, our understanding of the concept is still limited since the outsourcing strategy followed by companies can differ substantially with their different situations and different aims. One reason for this confusion may be the lack of established theoretical frameworks for evaluating an organization's outsourcing strategies (Bolumole et al., 2007) To overcome this problem, we make use of two social science theories: transaction cost economics (TCE) and resource-based view (RBV) to develop a general outsourcing framework within which outsourcing decisions can be examined and evaluated. TCE and RBV have been extremely influential in the study of outsourcing. The TCE cost based perspective considers outsourcing as a way by which organizations use external parties in order to reduce internal transaction and production costs, while the internal RBV perspective recognizes outsourcing as an appropriate strategy when in-house competencies and capabilities are unavailable.
Although both theories are often treated as independent approaches, there is an increasing body of accounting literature supporting the need for combining the perspectives to understand the complexities of outsourcing and eventually the inter-firm MCS (Häkansson & Lind, 2007; Chenhall, 2005). The combination of the theoretical perspectives employed aims for a greater appreciation of the relationship among transactions, resources, and relationships, thus extending and broadening the framework of firms’ strategic activities from a cost focus to a value focus.
Secondly, we highlight the link between strategy and inter-firm MCS. Hereby, we extend our outsourcings framework with a typology of inter-firm MCS that considers the role inter-firm MCS can play given a particular outsourcing strategy. The organizational sciences and strategy literatures provide useful insights concerning corporate organizational change. A dominant message in this body of research has been that companies must adjust their organizational structure and management processes to adapt to changes in the external competitive environment or its strategy in order to maximize performance (Johnson & Leenders, 2006; Galunic & Eisenhardt, 1994). Contingency theory follows Chandler's (1962) dictum that structure follows strategy and consequently, we assume that the outsourcing strategy of a company is an important determinant in shaping the interfirm MCS in use.
Thirdly, throughout this research we focus on the outsourcing of (total) facilities management. Because most of accounting research on interfirm control (except for Langfield-Smith and Smith, 2003; Poppo and Zenger, 2002; Van der Meer-Kooistra and Mouritsen et al., 2001; Vosselman, 2000; Roodhooft and Warlop, 1999; Widener and Selto, 1999) focuses on industrial and manufactured goods, the business-to-business exchange of services still remains an interesting setting for research. In recent years, both in the private and in public sectors, organizations have placed more attention on cost reduction and flexibility, concentrating on core competences and outsourcing non-core activities.
Outsourcing is a supply strategy often chosen as a means of increasing organizational efficiency and effectiveness (Steane and Walker, 2000). Whilst some short-term benefits for organizations can be achieved through outsourcing, there is a growing recognition that there may be longer-term costs not fully assessed by them (Bettis et al., 1992). Risks of outsourcing include losing in-house expertise and knowledge (Boston, 1996), unintentional loss of control, and reductions in quality (Lei and Hitt, 1995). There is an increasing awareness in management literature that the decision to outsource is a complex one with uncertain outcomes (Hui and Tsang, 2004). In relation to these issues, it is relevant to investigate the facilities management (FM) sector whose importance is increasing all over the world. FM is a typology of contract for services provision, which covers an extremely wide field of activities. FM encompasses workplace, facility, support services, property, corporate real estate, and infrastructure. In general, support services concerning FM range from building operational services, to construction management, and real-estate activities (Chotipanich, 2004). Thus, FM activities are complex since they require both low- and high-level technology with a broad range of abilities necessary to provide such diverse services adequately. Since its origin FM was based on the concept that it is necessary to rationalize and optimize noncore activities reducing costs. Nowadays, it is becoming important also from a strategic point of view. It has become apparent that there are clear shifts in focus as the practice of FM gradually matures. It is already discernible from published literature and review of practice that the initial preoccupation with tasks and functions has given way to an emphasis on processes and their management. In that way, companies are not only outsourcing their facilities activities but also the management and coordination of these facilities activities. The changing focus on FM as an integrated resource management framework requires dramatic shifts in competencies for both the demand side (purchasers of facilities and services) and the supply side (suppliers and service contractors). The trend towards organizational downsizing and outsourcing collectively imposes on many organizations the need to review seriously the internal competencies necessary for managing this new era of choices and flexibility. We believe these new forms of service supply relationships pose different risks and challenges to the purchasing company, leading to different controlling issues, and different interfirm MCS.
Recently, the focus on outsourcing has shifted to an evaluation of how it relates to managerial accounting. In 2007, the Chartered Institute for Managerial Accounting began to put new emphasis on the issue, beginning with president John Coughlan's discussion in March about the desire of managers to see more about the process.
“Business process outsourcing (BPO) is a growing phenomenon that's having a major impact on the finance function worldwide. Global competition to improve margins and increase shareholder value is leading companies to view BPO as an opportunity not only to cut costs but also to transform their businesses completely. Practices such as outsourcing, offshoring, business partnering and a variety of innovative collaborative relationships are stretching and blurring traditional organisational boundaries. Companies are plugging into the skills that are most able to deliver results, irrespective of where those skills are based. Mike Eskew, the chairman and chief executive of UPS, puts it this way: "Technology virtualises location." (Coughlan, 2007).
This new emphasis on the importance of outsourcing as a factor in firm management has opened wide the opportunity for research in this area. As discussed previously, much of the older researched has focused on the ethics of outsourcing rather than the practical managerial issues associated with it “Companies that operate BPO effectively, in using the service or providing it, can gain a competitive advantage. Knowledge process outsourcing can free financial managers to spend more time on driving shareholder value - the true role of the chartered management accountant. The management accountancy skills that lend themselves to strategic decision-making and value creation will not be threatened by BPO; they will be increasingly in demand.” (Coughlan, 2007). If then, we accept Coughlan's expertise as an industry monitor, we must agree that an examination of how firms may best incorporate these new opportunities is an important area for future study.
Peter Simons, a technical specialist with CIMA, puts it this way, “Leading companies have already seized the opportunities presented by finance transformation to not only make the costs of their account function lower, but also to engage management accountants in decision making across the business.” (Wild, 2007). Indeed, it appears that this could be a boon for managerial accountants as the opportunity presents itself to once again prove their usefulness in the corporate decision-making process. That process is key to corporate success, he said. “Finance transformation presents a threat to the traditional role of the accountant in business, but also presents an opportunity for those who can develop and support decision making. By finance transformation I mean the forces that are global markets and changes in technology, outsourcing, those kind of trends that are causing finance functions to become cheaper, but they're also becoming more effective in business.” (Wild, 2007).
The clear inference in many of the recent CIMA reports linking outsourcing and “good” decision-making is that those most qualified to make these decisions are managerial accountants lending a strong credence to the idea that via superior knowledge managerial accountants will develop an informal form of control that can be built upon to develop more formal control mechanisms. The good news is that, although the transformation of finance may threaten traditional roles in the provision of management information, it also provides exciting opportunities in the heartland of management accountancy: value creation. Management accountants have key roles to play in the decisionmaking process, from strategy formulation and implementation through to impact.” (Grant, 2007)
In addition to these variations in internal firm control, outsourcing can have a huge impact on the relationship between firms. Previously these relationships may have been dictated by formal relationship structures including contract language and sales agreements, but in the modern environment these relationships are much more fluid and requiring analysis of their control mechanisms. Given these conditions, the purpose of this segment is threefold: (1) to use the social sciences literature to examine the theoretical foundations/strategies for outsourcing; (2) to apply that theoretical foundation to explain why organizations outsource services and to explain why the benefits are primarily cost-based, resource-based, and/or strategic in nature; (3) to link the outsourcing strategy with interfirm MCS.
Rather than examine theory development specifically from a generic facilities management perspective, we focus specifically on outsourcing, which can be applied to many services. Given that the decision to outsource has been made (or not) as described in the preceding paragraphs, what theoretical bases for that decision (s) can be used to rationally explain that logic?
Complicating the issue is the discussion of “trust” as a corporate value and as a major factor in intra and inter firm relationships. “Reports of the death of traditional company structure are premature. However, it is undeniable that strategic alliances, outsourcing, networked and virtual organizations are flourishing. Both trust and control have the same aim of reducing organizational uncertainty, yet they achieve that goal in different ways. Controls such as budgeting proliferate in traditional organizations. Trust is different. Instead of influencing people's behavior, trust relates to the confidence in predicting behavior. Trust also is complicated by being made up of competency and goodwill, and each needs to be managed differently” (Emsley, 2006).
The problem with this addition of trust to the corporate environment is that the lack of it can damage business relationships as can the over abundance of trust. Ultimately, the issue of trust must be meshed with discussions of control and the acknowledgement that a degree of trust is acceptable when it is accompanied by formal control mechanisms including contracts and legal agreements. “Much of the research on inter-company collaboration has so far focussed upon the benefits of the collaboration (see, e.g., Bowersox, 1990; Lambert et al., 1996). Recently, however, literature is appearing that focuses on challenges and problems during attempts to establish collaboration between companies. According to many of these studies, the problems encountered are very often about relationship issues, related to collaboration among people in the partner companies.” (Alhstrom & Nordin, 2006). Many of the problems arise out of a lack of trust among the business partners and the lack of formal methods of control.
Therefore, to understand the nature of inter-firm relationships, we must first understand these control mechanisms, both formal and informal, which contribute to the way companies inter-relate. We must also accept that when a firm chooses outsourcing, it is necessarily creating a relationship with the company that is performing the outsourced service. In the following pages, we will attempt to define that relationship in terms of the control mechanisms and the elusive value of trust. “A useful classification of control forms that complies with the previous critiques is the distinction between formal and informal control mechanisms (Smith et al., 1995). Formal control consists of contractual obligations and formal organizational mechanisms for cooperation and can be subdivided into outcome and behavior control mechanisms (Ouchi, 1979). Informal control, also referred to as social control and relational governance, relates to informal cultures and systems influencing members and is essentially based on mechanisms inducing self-regulation (Ouchi,1979).” (Dekker, 2007).
By this definition then, trust is an informal control mechanism. As illustrated previously in the discussion of trust, as an informal mechanism it can either benefit or harm a company. “Self-regulating mechanisms allow interaction and exchange to occur unobtrusively, while orchestration mechanisms involve structuring these interactions. Both mechanisms are organised around various kinds of accounting... such as transfer prices and intellectual capital statementsand around the construction of segmentation in the network that provide it with a topology of centres and peripheries. Trust, it appears, is not a property of such a situation. Trust is a problematising devise. It is raised as a concern in the networks when trusting is absent.” (Mouritsen & Thrane, 2006)
When discussing control mechanisms, we must also acknowledge that there are significantly varied viewpoints of the importance of each one. Some will argue that formal controls, contracts, budgets and the like, are the better measurement of the success of an outsourcing relationship while others say “Outcome, behavior and social control are often equated with the conceptions of market” (Dekker, 2007).
There are two primary points of view regarding the measurement of the success of these relationships, the resource-based view and the transition cost economics view. Here we will discuss both in depth and how they are affected by outsourcing decisions.
“The issue of control relates directly to the second issue, the choice of governance structure. In the literature this choice has primarily been studied from a governance perspective, which, informed predominantly by transaction cost economics (TCE), predicts the institutional form chosen to govern a transaction TCE maintains that in principle a transaction can be governed by three discrete structural mechanisms: market, hierarchyor hybrid governance.1 The choice of mechanism to govern a transaction depends on a comparative analysis of the transaction costs of these alternatives, which costs relate to writing, monitoring, adapting and enforcing contracts. Assuming equal production costs, TCE predicts that the governance structure associated with the lowest transaction costs will be chosen to govern the transaction (Williamson, 1985, 1991).” (Dekker, 2007)
TCE & Agency theory
Coase (1937) is seen as the founder of transaction cost economics (TCE). Transaction costs refer to the costs of physical and human resources incurred in order to complete an exchange of goods and services between parties. These `costs of making each contract’ appear because of information asymmetry, bounded rationality and opportunism. Such costs arise from activities which include: evaluating suppliers, negotiation, control function, etc. (Coase, 1960; Arnold, 2000). The basic idea is now to find a governance structure with the lowest costs for each transaction. Therefore, we need deeper insights into the characteristics of transactions. Transaction difficulties and associated costs increase when transactions are characterized by asset specificity, uncertainty and infrequency. According to Williamson (1989, 1991), specificity is the most important aspect of a transaction. Specificity refers to asset specificity as well as human capital specificity. Goods and services with high specificity cannot be used in other transactions without huge additional costs. The presence of high asset specific investments can lead to contracting problems as the contracting parties need to safeguard specific investments against the threat of opportunism. Therefore the goods and services with high asset specificity and uncertainty should be kept under the full responsibility and control of a company (hierarchical governance).When asset specificity and uncertainty are low, and transactions are relatively frequent, transactions can be governed with an external outsourcing design (market governance). In reality though, much transactions are complex and do not possess pure market or hierarchical characteristics due to medium levels of asset specificity and high transaction frequency.
A common point of departure when accounting researchers using TCE is the observation that interorganizational relationships have increased in importance as companies have reorganized their activities to an increasing degree and outsourced their noncore activities (Häkkanson & Lind, 2007; Langfield-Smith & Smith, 2003; Van der Meer-Kooista & Vosselman, 2001; Arnold, 2000; Roodhooft & Warlop, 1999; Bradach & Eccles, 1989). According to these authors, supplier relationships, which could previously be handled through arm’s-length transactions, now needed to be handled through more elaborate supplier relations. Thus, the bilateral relations in the form of co-operative alliances or long term contracts between the organizations (a hybrid for of governance) are put at the forefront (Häkansson & Lind, 2007; Marshall et al., 2007).
Coase (1952) and Williamson (1991) both agreed that for a firm’s existence to be justified, the firm -with its internal network of relationships-must outperform the alternative external, arm’s length transactions. Put simply, an outsourcing decision will appear rational in this perspective if the reduction in production costs of the service consequent on outsourcing is not neutralized or exceeded by the additional transaction costs (Bolumole, 2007). As the firm and its service provider become closer, the risk of opportunism increases (Häkansson & Lind, 2007; Van der Meer-Kooistra & Vosselman, 2001). The issue of opportunism is best analyzed through the use of agency theory (Jensen & Meckling, 1976). Agency theory has been one of the most important theoretical paradigms in accounting during the last 25 years (Lambert, 2007). In the simplest agency models: the organization is reduced to two people: the principal and the agent, i.e. service providers and vendors. The principal’s roles are to supply capital, bear risk, and construct incentives, while the roles of the agent are to make decisions on the principal’s behalf and also to bear risk (this is frequently of secondary concern) (Lambert, 2007). Agency theory argues that under conditions of uncertainty and incomplete information two agency problems arise: adverse selection and moral hazard (Baiman & Rajan, 2002; Bolumole et al., 2007). Adverse selection refers to the problem that the principal cannot determine if the agent accurately represents his ability to do the work for which he’s being paid; moral hazard refers to the problem if assigned the task, the supplier may not have the same incentive to work as hard or as carefully in accomplishing the task as the buyer would if he retained the task. The latter is what Baiman & Rajan (2002: 215) call “the hidden action problem”. These two problems give rise to a number of methods of monitoring, which may include organizational and capital structure, remuneration policies, accounting techniques, and attitudes towards risk taking (Bolumole, 2007). More specifically, these safeguard mechanisms take the form of contractual clauses such as open book accounting, performance-based bonuses, and penalties. Agency costs refer to the total costs of administration and enforcing these arrangements, as well as resolving any conflicts that may ensue. The solution often offered to reduce agency costs is to lengthen the agreement between the principal and the agent. Three reasons are suggested for such cost reduction. First, long-time horizons provide an incentive for the principal to gather information about the agent’s behavior (Eisenhardt, 1989). Second, the passage of time clarifies the distinction between exogenous environmental effects from the agent’s shirking behavior. Third, longer time horizons reduce the agent’s incentive to shirk (Jensen & Meckling, 1976). Unfortunately, long term contracts are often very costly solutions and are most of the time incomplete since not every contingency can be specified or even known.
RBV & outsourcing
The theoretical framework of TCE is generally accepted as a useful framework for analyzing outsourcing decisions and has been popular in the interorganizational accounting literature. Nevertheless, in recent years, firms have drastically changed the manner in which they conduct business and are exploring various means of organizing their operations. All these actions cannot be explained from the perspective of reducing or eliminating transaction costs alone. The decision to outsource, for example may be driven by the need to focus on core competencies by engaging more specialized firms to carry out peripheral operations. This approach opens up a new logic, in which the gains for the firm from externalizing an activity do not derive from the changed cost of that activity, but from the opportunities arising from different and better utilization of the remaining activities. The RBV of the firm views the firm as a bundle of resources (Rumelt, 1984; Prahalad & Hamel, 1990). According to the Resource based view, enterprises are considered collections of competences and capabilities that must be maintained and developed. The Resource based view therefore focuses on internal characteristics and factors for companies’ competitive success (Grant, 1991). According to RBV, competitive advantage results from ownership of or unlimited access to-inimitable assets, innovations, and resource barriers, which enable the firm to shift market positions (Bolumole, 2007; Marshall et al. 2007; Arnold, 2000). Such resources are core competencies. This concept of ownership refers to the “operational control of”, rather than “the legal title to,” resources. Emphasizing the value-maximizing feature of RBV, competitive advantage is defined within this perspective as the ability to implement a value-creating strategy not simultaneously implemented by any current or potential competitors (Barney, 1991). Bolumole et al (2007:41) state: “Sustaining this advantage depends primarily on the firm’s ability to acquire, combine, and deploy resources in such a way that yields a long-lasting productivity and/or value advantage.” Within this perspective, collaboration allows an organization to access complementary capabilities in a situation where there are resource constraints.
The holistic outsourcing framework
Although the theories above are often treated as independent approaches, we think there is an increasing body of literature supporting the need for both perspectives to understand the complexities of outsourcing (Häkansson & Lind, 2007; Chenhall, 2005). Already a growing body of literature is arguing that TCE and the RBV are complementary which is based on the recognition that each theoretical perspective alone cannot fully explain boundary choice (Marshall et al, 2007; Madhok, 2002; Arnold, 2000; Poppo & Zenger, 1998).
While we acknowledge the contributions of the two theories, each theory has also its limitations. A first criticism of TCE has been the premise that all governance structures arise principally to reduce the potential for opportunism. Nevertheless, in the case of significant transaction costs, the organization may have no choice other than to pursue other forms of governance even if the threat of opportunism exists (Marshall et al., 2007). Secondly, the assumptions of TCE ignore other important influences such as a firm's existing portfolio of transactions and existing capabilities (Mota & Castro, 2004). Thirdly, the TCE perspective does not consider changes in governance structures over time (Bolumole et al., 2007; Kamminga and Van der Meer-Kooistra, 2007). Fourthly, TCE doesn’t take relational concepts in account (Dekker 2007; Hakänsson and Lind, 2007; Kamminga and Van der Meer-Kooistra, 2007; Anderson and Dekker 2005; Dekker 2004; Langfield-Smith and Smith, 2003; Tomkins, 2001; Van der Meer-Kooistra and Vosselman, 2000, Das and Teng, 1998; Dyer and Singh, 1998).
Furthermore, some have argued that each theoretical perspective alone cannot fully explain collaboration and a bundling is required (Marshall et all., 2007; Chenhall, 2005; Gray and Wood, 1991). This combined view simultaneously considers the dyadic (TCE) and the internal (RBV) perspectives of the firm when analyzing its services outsourcing strategy. TCE focuses primarily on the role of efficient governancethrough transaction analysis - in explaining firms as institutions for organizing economic activity, whilst the RBV focuses on the search for competitive advantage through resource analysis. Forming supply chain relationships according to TCE is based on the understanding of performance differentials (i.e. scale or degree) between firm-based and market-based transactions. Within RBV, firms are motivated by an understanding of performance differentials between firms. The theoretical perspectives above can next be combined to create a cost and economic perspective to evaluate the impact of services outsourcing (see Figure 1). In the next paragraph we discuss each component.
Bolumole et al., 2007 classify the different factors from each of the theoretical perspectives as external, TCE-based; internal, resource-based; and external, control related (NT-based). The external principle hereby deals with the need for organizations to reduce the external (transaction) costs involved in bringing goods and services to market, and possibly gain control over network-wide resources in the process, by internalizing otherwise external competencies and capabilities. From the internal principle, or resource based logic, organizations with resource constraints may collaborate regardless of the presence of high asset specificity, thus indicating that accessing resources is a more prominent concern for a company than the attributes of the transaction in the context of collaboration. They say these factors -and the reasons firms outsource- influence, and are influenced by, the nature of the relationship between buyer and supplier.
According to Bolumole et al TCE and RBV suggest the supply chain role of service providers is largely influenced by firms’ approach to services outsourcing and can range from a contractual (cost-based) emphasis to a resource coordination responsibility (interactive role for service provider) and/or a network-wide emphasis on services integration (facilitating role for service provider). Thus, the nature of each service provider is conditioned by the extent to which client firms encourage third-party involvement as well as their underlying reasons for outsourcing (Bolumole, 2007:45). When looking at the reasons for outsourcing each theoretical perspective can be used to explain why organizations choose to outsource their services. Outsourcing in the TCE perspective is typically limited to one-time, functional transactions implemented through short-term, contractual relationships with service providers. Firms outsource to minimize transaction costs and the focus is on contractual objectives. On the other hand, RBV focuses on a longer-term approach. This “partnership” approach requires a cultural switch from commercial competition to commercial collaboration.
The RBV is , however, closely aligned with TCE because resource combinations are influenced by transaction cost economizing (Williamson, 1991). RBV acknowledges the importance of asset specificity to the creation of value-based competitive advantage.
With regards to the corporate objectives of outsourcing, a TCE cost-based perspective considers outsourcing as a way by which organizations use external parties in order to reduce internal transaction and production costs. Its focus is internal and dyadic. The RBV recognizes outsourcing as an appropriate strategy when in-house competencies and capabilities are unavailable. Although outsourcing within this RBV deals with longer-term relationships, this perspective is limited predominantly by the internal orientation of firms.
The extent of outsourcing has been conceptualized at three levels: operational, tactical; and strategic. Following Das & Teng (2000) this corresponds with different degrees of supply chain involvement. The operational level involves little, if any, supply chain involvement; tactical and strategic levels coincide respectively with medium- to high-level supply chain involvement. These levels, to which a firm decides to outsource its services, are largely influenced by the operational matches between the client and the service provider. The relationship between TCE and RBV implies that the “more dependent value chain activities are on the availability (or otherwise) of a specific asset base (i.e., the degree of asset specificity), the greater is its rent-earnings potential to the firm” Bolumole et al. 2007: 49). In that way, when a firm decides to outsource certain operational functions within the services process (classic make- or buy-decision), the responsibility of the service provider will then be, in essence, to translate the strategic and tactical objectives into operational activities. Following the RBV, where the extent to which organizations outsource is limited by the direction imposed by in-house resource availability, the service providers’ involvement will be mainly tactical. The service providers’ roll will then be to coordinate operational activities to achieve strategic objectives; to set objectives in both financial and operational terms and to establish performance improvement tactics.
Although not relevant for this article Network theory also acknowledges that the extent of outsourcing is influenced, but more so by the application of relational contracting and network coordination. The service provider will thus not only assist the client firm in tactical but also in strategic decision-making. Meaning it co-defines the long-term mission and strategic objectives of the interfirm relation, it sets objectives largely in financial terms, oversees the control of capital resource allocation and it monitors performance. The service provider’s involvement at each level is often an iterative process, moving back and forth between the understanding of long-term strategic objectives and the specific day-to-day operational developments required to support and implement these objectives.
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