Risk mitigation of outsourcing manufacturing process

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Date
2012
Authors
Sivaraman, Rukumangatha Rajah
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Abstract
Outsourcing of semiconductor manufacturing process is becoming integral part of the corporate strategy of an organization which is driven by cost advantage and flexibility during uncertainty. Despite the benefit, there are various risk associated with outsourcing namely supplier dependency, business disruption, quality and leakage of know how. This study aims to identify risk mitigation attributes and examine the relationship between the risk mitigation attributes and risk. Two influential theories, Transaction Cost economic (TCE) and Resource Based View (RBV) is use in this study to determine the outsourcing motivation, risk of outsourcing, and mitigation attributes. The TOP (Technology, Organization, People) model is use to form the theoretical framework of this study. The risk mitigation attributes proposed for this model is Technological Capabilities (TC), Organization Culture (OC) and Human Capital Development (HCD). Research data was collected via structured questionnaire circulated among multinational semiconductor company being the respondent and analyzed for factor analysis, reliability test and regression analysis. The finding of this study indicates that the risk mitigation attributes has significant influence in mitigating the risks studied. This research concludes that the mitigation attributes will be able to mitigate the mentioned outsourcing risk. As the risk mitigation attribute able to mitigate the risk, organization can optimize the cost benefit and flexibility through outsourcing.
Description
Master
Keywords
Business Administration , Manufacturing
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