Why do hotels outsource? An investigation using asset specificity

Abstract

Purpose – To apply Williamson's six dimensional typology of asset specificity as a theoretical framework for appraising the nature of outsourcing activities in hotels.

Design/methodology/approach – Interviews with senior managers in large hotels.

Findings – Site specificity and brand capital appear to be the most pertinent dimensions of asset specificity in the sample investigated. Most observations support the transaction cost economics (TCE) prescription that high asset specificity results in insourcing.

Research limitations/implications – This study suffers from the normal shortcomings associated with fieldwork based on a limited sample of observations. Rather than attempting to make generalisable assertions, the study provides an exploration of the ways that asset specificity might manifest itself in hotel outsourcing decision making.

Practical implications – Asset specificity represents an important construct that should be considered when considering whether to outsource. It also provides a valuable context when considering the motivations of parties entering into a subcontracting arrangement.

Originality/value – No study applying either the asset specificity notion or the broader TCE theory has been found in the hospitality management literature. Also, there is a lack of prior research concerned with outsourcing in the hotel sector.