The outsourcing decision-making process: two extensions to the management accounting toolkit

Authors

  • Lars Bråd Nielsen Booz & Company 7 Savoy Court Strand London WC2R 0JP
  • Hanne Nørreklit NHH Norwegian School of Economics Helleveien 30 5045 Bergen

DOI:

https://doi.org/10.7146/propracon.v2i2.16681

Keywords:

Outsourcing, decision-making, management accounting information, methodology

Abstract

In response to a lack of research, this paper explores the type of reasoning that companies use to structure their complex outsourcing decision and the procedures for producing relevant accounting information. Analyzing two manufacturing companies, we uncover two methods for structuring the outsourcing decision-making process and for determining relevant accounting information: an analytical method and an actor-based method rooted in pragmatic constructivism. The two cases show that both strategy and management accounting play an interrelated, crucial role in the decision to outsource. The article adds to the academic literature on calculative decision theory by accentuating the notion of ‘practice’ rational decision-making, where managers have to integrate sensing and reasoning into practical affairs. In practice, the results provide extensions to the management accounting toolkit since these cases can serve as inspiration for structuring the outsourcing decision-making process in similar situations.

Author Biographies

Lars Bråd Nielsen, Booz & Company 7 Savoy Court Strand London WC2R 0JP

Senior Consultant

Hanne Nørreklit, NHH Norwegian School of Economics Helleveien 30 5045 Bergen

Professor of Management Control

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Published

2012-09-01

How to Cite

Nielsen, L. B., & Nørreklit, H. (2012). The outsourcing decision-making process: two extensions to the management accounting toolkit. Proceedings of Pragmatic Constructivism, 2(2), 59–69. https://doi.org/10.7146/propracon.v2i2.16681

Issue

Vol. 2 No. 2 (2012)

Section

Speeches

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