Evaluating the role and integration of contract manufacturing strategy in supply chain management: An empirical study

Recently, the US manufacturers have been facing strong competition domestically and globally for cost reduction and product customisation. A key response to these competitive pressures is the outsourcing strategy. While sporadic case studies have investigated outsourcing's cost implication, empirical analyses examining outsourcing's financial and operational performance are lacking. This paper investigates the impacts of outsourcing in the US manufacturing sector and hypothesises that higher level of outsourcing will lead to higher performance. Using the US Economic Census as the data sources, the paper finds that outsourcing is positively associated with ROA and ROI but is negatively associated with product specialisation. Copyright © 2010 Inderscience Enterprises Ltd.