Firm-level outsourcing decision making: A balanced scorecard-based analytic network process model
2014
We combine the
Analytic Network Process(ANP) and the
Balanced Scorecard(BSC) to build a cohesive
decision modelfor determining firm level IT
outsourcingstrategy. Although prior research has confirmed the existence of interactions among BSC indicators and the potential impact of those interactions on firm level performance, interactions have hitherto not been fully understood and implemented, due to lack of adequate tools. In this paper, we take advantage of the strength of the ANP technique to address the interaction issues between indicators when applying the BSC. The ANP establishes the interactions among the indicators, prioritizes the indicators under the four BSC perspectives, and then identifies the best
outsourcingstrategy through synthesis. A case company is used to study the feasibility of our approach at firm level
outsourcingdecision making. Finally, we examine the robustness of the model through sensitivity analysis, and demonstrate the importance of incorporating indicator interactions when operationalizing BSC. Managerial insights and implications derived through model analysis are discussed.
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