Micro and small business: competition in the end market or in the outsourced market?

Abstract

Few studies on outsourcing have focused on its effects on the development of the hired firm, usually a small company. This limitation has motivated the authors of this article to develop the present study based on a sample of small companies in the clothing sector to compare the benefits and requirements between acting in the final market or in the outsourced market (such as subcontractors). The benefits considered are the effect that growth in these two markets has on the competitiveness and on the productivity of the company, while the requirements considered are the technical capacity and entrepreneurial capacity of the company needed to grow in those markets. We adopted the empirical research method based on statistical analysis. The results showed that the end market has a stronger effect on the firm's competitiveness and provides higher productivity. They also showed that competition in this market calls for a better performance in both types of internal capabilities.