Exploring the Factors Affecting Hotel Outsourcing: Taiwan Case
The purpose of this study was to examine factors affecting hotel outsourcing in Taiwan. A series of two studies was performed. In study 1, content analyses of senior hotel manager interviews were conducted to explore factors determining hotel outsourcing, including jobs requiring capabilities and skills that may be difficult to afford with the hotel’s tight or limited resources, a hotel’s resources and its business scale, transaction costs, and jobs with standard operation procedures. A questionnaire survey was used in study 2, and results indicated that the percentage of current outsourcing and desired outsourcing for ...view middle of the document...
Recent years have seen increased attention given to hotel outsourcing in the literature (Goldman & Eyster, 1992; Hallam & Baum, 1996; Hemmington & King, 2000; Espino-Rodriguez & Gil-Padilla, 2005; Lam & Han, 2005). Espino-Rodriguez and Gil-Padilla (2005) determined the factors affecting outsourcing of information system/information technology activities in hotels, and Espino-Rodriguez and Padron-Robaina (2004) studied hotel outsourcing and its impact on operational objectives and performance. However, little research has been done to explore determinants of hotel outsourcing in Taiwan. This study attempts to investigate factors affecting hotel outsourcing in Taiwan.
Strategic outsourcing refers to the company totally or partially outsourcing activities or operations essential to the company that are not core competencies, leading to medium or long-term cooperation with the suppliers. The companies would then be able to concentrate on its core competencies that generate added value to produce competitive advantage (Quinn, 1999). From review of theoretical and empirical literature on the main strategic advantages of outsourcing (Ford & Farmer, 1986; Johnson, 1997; Saunders, Gelbet, & Qing, 1997; Espino-Rodriguez & Gil-Padilla, 2005), ten advantages of hotel outsourcing were identified. Out sourcing allowed hotels to:
1) Acquire capabilities and skills that are difficult to access with hotel own resources;
2) Increase flexibility in performing hotel operations;
3) Focus on the hotel’s core activities;
4) Reduce investment;
5) Complement hotel resources and capabilities;
6) Access to more qualified, more experienced personnel;
7) Acquire the service more cheaply than if it were performed by the hotel;
8) Suppliers offer the hotel good services;
9) Facilitate the performance of in-house hotel operations;
10) Reduce hotel costs
Transaction cost and outsourcing
Transaction costs are comprised of the costs of seeking the suppliers, inspection of goods and establishing and formalizing the terms of agreement, including the means to both guarantee compliance with the terms and protect against the potential expropriation of the investments made, to ensure that contract conditions are fulfilled (Williamson, 1985).
Espino-Rodriguez and Gil-Padilla (2005) determined the factors affecting outsourcing of information system/information technology activities in hotels from the resource-based view of the firm. Results of their study indicate that the greater the transaction costs, that is the greater the costs that information, negotiation and supervision of compliance entail, the less the tendency to outsource the activity. Based on the above, this study proposes that the greater the hotel’s transaction costs, the more likely the hotel will be not outsourced.
Valuable resources and outsourcing
Recent studies are adopting a more strategic perspective to explain the outsourcing...