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Outsourcing: is the social exchange theory still relevant in developing countries?

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Purpose ‐ The paper offers a viewpoint on the relevance of the underpinnings of the social exchange theory (SET) in understanding inter-firm relationships, specifically with respect to outsourcing relationships in a Southeast Asian context. Design/methodology/approach ‐ The viewpoint is based on literature review on outsourcing trends, characteristics and underlying theories including the underpinnings of SET in combination with anecdotal accounts from practitioners in the electrical and electronics (E&E) sector as well as personal emic observations of management styles embedded within the socio-cultural context of a developing country. Findings ‐ Management and outsourcing of contracts in a Southeast Asian context are usually done on a personal level with some leeway provided by top management. The reverse is true for developed countries where all processes and contracts need to be seen as just and transparent to stakeholders. Dominant theories identified with outsourcing generations seem to be embedded in management culture of developed countries which are largely influenced by the transaction cost economics theory and its extensions, the resource-based view and the resource-dependence view. By placing a caveat on generalizability, the paper opines that SET is still relevant in the Southeast Asian context. Originality/value ‐ As outsourcing characteristics have changed and evolved over the years, relationship models need to be reviewed and redefined to be in congruence with the changes that are occurring. The Southeast Asian socio-cultural context can be a reference point for conceptualization of relationship models to understand E&E outsourcing relationships along global supply chains.
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Keywords: Channel relationships; Outsourcing; Relationship marketing; Southeast Asia

Document Type: Research Article

Publication date: January 1, 2010

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