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The Hidden Value of Outsourcing

Outsourcing has been a popular strategy used by businesses to remain flexible and adapt to changing client needs in uncertain market environments. To investigate how outsourcing helps businesses navigate such markets, J. Jay Choi and colleagues explored the interrelationships between the firm’s financial constraints and flexibility to adjust their day-to-day operations.

Their research found that outsourcing strategies helped businesses alleviate financial constraints by increasing the flexibility of their operations. Specifically, businesses managed to avoid making high-risk investments to production, and instead engage in sequential and dynamic decision-making that was informed by the changing market environment, saving them time, energy and money.