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Introduction
Strategy matters and according to Freedman (2013), it is about “maintaining a balance between ends, ways, and means; identifying objectives; as well as the resources and methods available for meeting such objectives” (p. xi). In most cases, firms seek to obtain competitive superiority by a strategic choice of cost reduction, improved quality and/or better services. Making a strategic choice is vital to small- and medium-sized enterprises (SMEs) in particular and this is due to the resource constraints these firms often encounter (Jarillo, 1989; Hessels and Parker, 2013). They have to manage their resources with utmost care so as to ensure maximum usage. Thus, strategic outsourcing could be a promising approach for SMEs to get necessary flexibility to focus on their key skills and competences and, in turn, meet the objectives set.
However, past research has pointed out that SMEs tend to lack strategic vision, and usually the decisions are made by intuition and short-term thinking (Torrés and Julien, 2005). The lack of strategic vision and the tendency to ad hoc activities, for instance, ad hoc collaboration, is found on the subject of outsourcing in SMEs (Edvardsson et al., 2011; Smogavec and Peljhan, 2017).
In the extant literature, outsourcing has been defined in various ways. For this paper, Smogavec and Peljhan (2017, p. 206) definition of outsourcing in SMEs was used: “We speak of outsourcing when a company gains products and/or services that are exclusively adapted to that company’s business procedures and similar companies might perform them in-house.” Thus, strategic outsourcing implies firms gain production and/or services from outside in order to lower cost, specialize on core competitiveness, as well as improve services or other strategic initiatives.
So far, very few empirical research studies are available on the outsourcing pattern among SMEs in general, and they are inclusive (Smogavec and Peljhan, 2017). Against this background, the aim of this paper is to examine strategic outsourcing among SME service firms in Iceland, from 2009 to 2018. More precisely, the paper aims to answer the following research questions:
What kinds of SMEs have developed strategy for outsourcing?
Do SMEs with an outsourcing strategy outsource more than other firms?
Does the existence of a strategy affect the reason for outsourcing?
Does the existence...