The Effect of Outsourcing on Organizational Performance: In Spa Service Enterprise.

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Date

2018-08-05

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Addis Ababa University

Abstract

The research was based on spa service enterprise, a prominent and government owned bath and hotel service provider. The purpose of the study was to establish what driven spa to outsource and how that decision affects the overall performance of spa. The research questions were presented in order to identify the effect of cost-driven outsourcing on organizational performance; the effect of expertise-driven outsourcing on organizational performance and the effect of focus-driven outsourcing on organizational performance. The study employed an explanatory research design. Out of the study population of 780 employees of the enterprise, a sample size of 205 was taken, whose elements was selected using a random sampling technique. Questionnaires were used as the primary data collection instrument. The response rate was 97%, with 199 questionnaires properly filled out of the distributed 205 questionnaires. Data was analyzed using descriptive statistics, correlation and regression analysis and then presented in tables. The finding of study implies that cost driven outsourcing had positive and statistically insignificant effect on spa performance. And expertise driven outsourcing had negative and statistically insignificant effect on spa performance. Finally, focus driven outsourcing had positive and statistically significant effect on the organizational performance of spa. Although, spa driven force for outsourcing was cost reduction, focus driven outsourcing had shown a greatest effect on spa performance. This study recommends, since the results shows that there is insignificant effect of outsourcing strategy on spa service enterprise performance, the management of the organization should review this strategy again for further decision. In this study 38.3 % of the variance in dependent variable (organizational performance) was explained and predicted by independent variables (cost driven, focus driven and other capability driven outsourcing). Therefore an interested researcher could identify other predictor and execute study more

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Keywords

outsourcing, organizational performance, hospitality

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