Effect Outsourcing Strategy on Institutional Performance in Ethiopian Private Banks

Abstract

The purpose of the study was to examine outsourcing effect on institutional performance in Ethiopian private commercial banks Dire Dawa District. Explanatory survey research design was employed and using quantitative methods. Stratified random sampling technique was used to select the respondents. The usable sample of 116 were used giving a response rate of 85%. The primary data gathered in the form of self-administer questionnaires with a Likert typed-scale. Ordered logistics regression were employed to satisfy specific objectives of this study. The analysis indicated that three outsourcing dimensions (Innovation Driven Outsourcing; Quality Driven Outsourcing and Cost Driven Outsourcing) have significant effects on the other hand, focus on core
competencies driven outsourcing wasn’t significantly influence on institutional performance of private commercial banks. Thus, management team within private commercial banks strategic outsourcing is one way by which firms may build and sustain their core competencies, which is vital for survival. Therefore, a firm needs to create a focus around its core competencies, which entails handing over the activities of low strategic value to specialists who can do them better through strategic outsourcing.