The impact of outsourcing on the transaction costs and boundaries of manufacturing

This paper discusses the concept of outsourcing, along with an account of the economic benefits that are achieved by reconfiguring the organization and reducing the transaction costs of providing products and services. With the practice of outsourcing experiencing exceptional growth, this paper examines the corresponding change (decline) in UK manufacturing as an economic activity, and considers how the economic benefits of outsourcing alter the contribution that an organization makes to a sector's gross domestic product. To assess this issue, an input-output methodology for measuring economic restructuring in UK manufacturing is presented. © 2003 Elsevier B.V. All rights reserved.