Study of UK’s Hotel Industry Measuring the key success factors of outsourcing in relationships between a hotel and the vendors

Study of UK’s Hotel Industry

Measuring the key success factors of outsourcing in relationships between a hotel and the vendors.

Study of UK’s Hotel Industry

by Irfan Iftekhar

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ABSTRACT

Outsourcing strategy has recently become very important topic in both business world and

academic literature. It has changed the way that firms compete in diverse industries ranging

from hospitality, information technology, automobiles, aerospace, oil and gas,

telecommunications, pharmaceutical or financial services etc. Academic research suggests

that many multinational and national companies benefited from this strategy. This has

influenced even further research, which started to focus on key success factors of

outsourcing in relationships between the clients and vendors. Management of outsourcing

relationships has been strongly developed in industries such as: manufacturing or

information systems. However, there has been little attention given to hospitality industry,

for which due to the nature of its product, outsourcing plays very important role. This

dissertation identifies and analyses the key success factors of outsourcing relationships

proposed by different industries. It proposes new theoretical model and uses quantitative

deductive research strategy, in order to test 6 different independent variables influencing

perceived success of outsourcing in relationships between a hotel and the vendors, based on

study of UK’s hotel industry. The statistical analyses are conducted through IBM’s SPSS v. 15

software for Windows. Literature reviewed in this study, points out that there are many key

factors proposed by scholars. Although, findings of this study will prove that only very few of

them are seen as key success factors of outsourcing in relationships between a hotel and its

vendors. Practical implications coming from this study can be used by hotel managers as a

guide, which can help to understand of how to successfully manage outsourcing

relationships.

Key words: Outsourcing, Key Success Factors of Outsourcing Relationships, Hotel Management

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Table of ContentsChapter 1: Introduction......................................................................................................... 10

1.1 Background of the study...............................................................................................10

1.2 Significance of this study...............................................................................................11

1.3 Aims and objectives......................................................................................................12

1.4 Research approach........................................................................................................13

1.5 Dissertation’s outline....................................................................................................13

Chapter 2: Literature Review.................................................................................................15

2.1 Introduction.................................................................................................................. 15

2.2 Definitions of Outsourcing............................................................................................15

2.3 Outsourcing’s revolution...............................................................................................16

2.3 Why hotels outsource?.................................................................................................19

2.3 Successful outsourcing relationships............................................................................20

2.4.1 Outsourcing relationships in hotel industry............................................................22

2.4 Summary.......................................................................................................................24

Chapter 3: Research Hypothesis and Research Model..........................................................25

3.1 Introduction.................................................................................................................. 25

3.2 Review of empirical studies on success factors in outsourcing relationship.................25

3.3.1 Trust....................................................................................................................... 27

3.3.2 Commitment.......................................................................................................... 29

3.3.3 Communication......................................................................................................30

3.3.4 Interdependence....................................................................................................31

3.3.5 Conflict resolution..................................................................................................31

3.3.6 Cultural similarity...................................................................................................33

3.3 Summary.......................................................................................................................34

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Chapter 4: Methodology and Methods used........................................................................35

4.1 Introduction.................................................................................................................. 35

4.2 Research strategy..........................................................................................................35

4.3 Research design............................................................................................................ 37

4.3.1 Secondary data collection..........................................................................................38

4.3.2 Sample....................................................................................................................... 38

4.3.4 Primary data collection process.................................................................................39

4.3.5 Questionnaire design..............................................................................................40

4.3.6 Pilot testing.............................................................................................................43

4.3.7 Ethical considerations................................................................................................44

4.4 Data analysis................................................................................................................. 44

4.4.1 Validity....................................................................................................................45

4.4.2 Reliability................................................................................................................45

4.4.3 Hypotheses testing method....................................................................................46

4.5 Summary.......................................................................................................................46

Chapter 5: Analyses and findings...........................................................................................47

5.1 Introduction.................................................................................................................. 47

5.2 Respondent’s demographics.........................................................................................47

5.2.1 Respondents gender...............................................................................................47

5.3.2 Respondents age....................................................................................................48

5.3.3 Respondents’ occupancy........................................................................................49

5.4 Reliability of the measures............................................................................................49

5.6 Validity of the measures...............................................................................................50

5.5 Hypotheses testing........................................................................................................53

5.5.1 Assumptions checking procedures.........................................................................54

5.5.2 Model Evaluation....................................................................................................55

5.5.3 Independent variables – predictors........................................................................56

5.5.4 Summary................................................................................................................ 60

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Chapter 6: Discussions, recommendations and conclusions.................................................61

6.1 Introduction.................................................................................................................. 61

6.2 Discussions....................................................................................................................61

6.3 Research contribution and conclusions.........................................................................64

6.4 Study Limitations...........................................................................................................66

6.5 Future research.............................................................................................................67

References..............................................................................................................................68

List of Tables

Table 1. Dissertation’s outline.............................................................................................14

Table 2. The outsourcing’s revolution.................................................................................18

Table 3. Empirical studies on outsourcing and hotel management from year 2000 onwards.............................................................................................................................. 22

Table 4. Outsourcing relationship factors...........................................................................27

Table 5. Measurement Items..............................................................................................41

Table 6. Reliability of the measures....................................................................................50

Table 7. Construct validity of the measures........................................................................52

Table 8. Model Summary....................................................................................................55

Table 9. ANOVA...................................................................................................................56

Table 10. Coefficients .........................................................................................................56

Table 11. Hypotheses - results summary............................................................................59

Table 12. Part correlations..................................................................................................60

List of Figures

Figure 1. Research Model....................................................................................................34

Figure 2. Process of deduction............................................................................................37

Figure 3. Gender of respondents........................................................................................48

Figure 4. Age group.............................................................................................................48

Figure 5. Job title.................................................................................................................49

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Figure 6. Process of multiple regression analysis................................................................53

List of Appendixes

Appendix 1. Questionnaire.................................................................................................76

Appendix 2. Ethical form.....................................................................................................81

Appendix 3. SPSS coding and labelling................................................................................82

Appendix 4. Frequency tables and descriptive statistics.....................................................83

Appendix 5. Reliability of the constructs.............................................................................86

Appendix 6. Construct validity – factor analysis..................................................................90

Appendix 7. Multiple regression and correlations............................................................101

Appendix 8. Regression’s scatterplots...............................................................................104

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Chapter 1: Introduction

This dissertation investigates what are the key success factors in outsourcing relationships

between the hotel and the vendors, based on study of UK's Hotel Industry. This chapter

outlines the background of the study, justifies its significance and provides its aim and

objectives. In addition, it explains what is the research approach used, and provides short

description of each chapter.

1.1 Background of the study

When business struggles to reduce its costs and grow its revenues, outsourcing initiatives

are solutions to many large, medium and small sized enterprises (Power et al., 2004). As

suggested by Kakabadse and Kakabadse (2000), outsourcing practices date back to eighteen

century England. However, it was not until the 1980’s when outsourcing strategies became

widely adopted by organisations (Hatonen and Eriksson, 2009). Nowadays outsourcing

practices are both domestic and international (offshore outsourcing), this creates a very

powerful outsourcing industry (Hatonen and Eriksson, 2009). In 2008, forecast presented by

ARM (2008) estimated that in 2012 global outsourcing industry will reach $975 U.S. billions.

According to academic studies, outsourcing revolution has changed the way that firms

compete in diverse industries such as hospitality, information technology, automobiles,

aerospace, oil and gas, telecommunications, pharmaceutical or financial services etc

(Carson, 2007; Hatonen and Eriksson, 2009, Gonzalez et al., 2010). There are numerous

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multinational companies which have benefited from outsourcing. Classic example is case

study of British Petroleum, which used outsourcing as a strategic tool in order to reduce its

costs, increase effectiveness, mitigate risks, smooth the integration of acquisitions, ensure

that the predicted cost savings match the market’s expectations and positively influence the

company’s share price (Bravard and Morgan, 2006). As it can be noticed this one example

itself, highlights several benefits of successfully implemented outsourcing strategy.

Such a great popularity of outsourcing in the business world, created even greater interest

for academic research (Gonzales et al., 2010). Study of Hatonen and Eriksson (2009)

suggests that outsourcing revolution in academia can be divided into three stages, these are:

Big Bang (from 1980’s to 1990’s); Bang-wagon (early 1990’s to early 2000); and finally

Barrier-less Organisations (from year 2000 onwards). The analyses of these three stages

indicate that the most popular theoretical perspectives in regard to outsourcing include:

resource based view (RBV) (Barney, 1991; Mclvor, 2000; Aubert et al., 2004; Espino-

Rodriguez and Padron-Robaina, 2006); transaction cost theory (TCT) (Coase, 1937;

Williamson, 1995; Tate et al., 2009); and institutional/organisational theory (Kshetri, 2007;

Tate et al., 2009). Furthermore, the same analyses indicate that academics have given very

little attention to outsourcing practices within the hotel industry, in which outsourcing as a

strategy plays very important and significant role (Donada and Nogatchewsky, 2009).

1.2 Significance of this study

According to Gonzalez et al., (2010) since year 2000 up to 2010 there were only around 20

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papers published in the field of outsourcing in hotel industry. Within these 20 studies onl

two studies addressed the issue of interorganisational relationships (Rodriguez-Diaz and

Espino-Rodriguez, 2006; Donada and Nogatchewsky, 2009). These two papers have

significant importance to this dissertation, because they indicate how undeveloped the topic

on key success factors of outsourcing relationships within the hotel industry is, in

comparison to other industries such as: information systems, manufacturing or marketing

(Lee and Kim, 1999; Goles and Chin, 2005; Harland et al., 2005; Han et al., 2008; Hatonen

and Eriksson, 2009; Bharadwaj et al., 2010).

Out of these three above mentioned industries, literature in information systems (IS) field is

developed to the greatest extent. In 2005, study conducted by Goles and Chin presented a

summary of the studies in the field of outsourcing relationships in IS. The major findings

from Goles and Chin (2005) concluded that there are around 23 key success factors of

outsourcing relationships, which were most frequently tested by academics from IS field.

This dissertation will use the study of Goles and Chin (2005) as one of the major platforms in

order to select the strongest 6 out of 23 factors, and test whether these 6 factors are also

applicable UK’s hotel industry. It is interesting to find out whether the key success factors of

outsourcing relationships for the IS industry which is purely technical are the same or

different as for the Hotel industry which is purely focused on the customer services.

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1.3 Aim and objectives

The aim of this study is to make some fundamental contribution to understanding, what are

the key success factors in management outsourcing relationships proposed by the different

industries; and what is the relationship between these key factors and perceived success of

outsourcing in relationships between a hotel and the vendors, based on study UK’s Hotel

Industry. In order to achieve this, the following objectives are proposed:

To examine the literature and identify the gap in research on management of

outsourcing relationships in hotel sector.

To investigate what are the key success factors in regard to management of

outsourcing relationships based on studies from hotel and other industries.

To propose research hypotheses and develop the research model.

To carry out an empirical study in order to examine the proposed model in terms of

its quality and predictability.

To provide recommendations on successful outsourcing relationships in Hotel

Industry based on analysis, findings and discussions.

1.4 Research approach

This dissertation identifies and analyses the key success factors of outsourcing relationships

proposed by different industries. It proposes new theoretical model and uses quantitative

deductive research strategy, in order to test 6 different independent variables influencing

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perceived success of outsourcing in relationships between a hotel and the vendors, based on

study of UK’s hotel industry. The statistical analyses are conducted through IBM’s SPSS v. 15

for Windows.

1.5 Dissertation’s outline

This dissertation project is divided into six chapters. Table 1 presents the outline of the

chapters and provides a brief description of each chapter.

Table 1. Dissertation’s outline Chapter Description

Introduction The first chapter provides a brief background of outsourcing phenomenon. It highlights the significance of the study and outlines its aim and objectives.

Literature review This chapter focuses on examining and analysing the literature in regard to outsourcing. It aims to identify the gap in existing academic research.

Hypothesis and research model Chapter three will discuss in detail the research hypotheses and research model stated for this dissertation.

Methods used This chapter is focusing on the research strategy, research design, sample used and hypothesis analyses.

Analysis and findings This chapter is purely focusing on analyses of primary data collection for this dissertation.

Discussions, recommendations and conclusions

This chapter focuses on finding the connection between initial objectives of this project and the findings of the primary research.

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Chapter 2: Literature Review

2.1 Introduction

The topic in regard to management of outsourcing relationships has been widely discussed

in industries such as IT, Logistics or Manufacturing (Lee and Kim, 1999; Goles and Chin, 2005;

Bharadwaj et al., 2010). However, the same topic still remains undeveloped in terms of

Hospitality Industry, in which outsourcing strategies have been widely adopted by both

independent and chain affiliated hotels (Hemmington and King, 2000, Gonzalez et al., 2010).

In order to address this issue, literature review will explore the preliminary studies and

theories related to outsourcing. Firstly, definition of outsourcing will be provided. This will

lead to general discussion on outsourcing revolution in practice and academia. When this is

achieved, research will narrow its focus to ‘outsourcing in hospitality industry’ and review of

the literature will then be examined. Finally, the gaps in literature will be identified and

justification of the research objectives will be provided.

2.2 Definitions of Outsourcing

As previously mentioned in the introduction chapter, outsourcing strategies have been

widely implemented in almost all industries. However, there has not been yet, a mutually

agreed definition in regard to this phenomenon (Harland et al., 2005). Thus, different

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industries define outsourcing in their own way.

According to Embleton and Wright (1998, pp.94) outsourcing is ‘a practice of handling over

planning, management and operations of certain functions to an independent third party’.

For Kakabadse and Kakabadse (2000, pp. 670) outsourcing is ‘a form of predetermined

external provision with another enterprise for the delivery of goods and services that would

previously have been offered in house’. Definition proposed by Goles and Chin (2005, pp.49)

states that ‘outsourcing is an ongoing long term linkage between an outsourcing vendor and

customer, arising from a contractual agreement to provide one or more comprehensive IT

activities, processes, or services with the understanding that the benefits attained by each

firm are at least in part dependent on the other’.

While the variety of definitions of outsourcing have been suggested, this paper will use

definition established by Lam and Han (2005, pp.42), who define outsourcing as a

‘management strategy in which a hotel utilizes a specialized outsourcing supplier, forming

strategic alliances with it, to have the supplier operate certain hotel functions, in an attempt

to reduce costs and risks and improve efficiency. This allows the hotel to focus efforts on its

core competency and strengthen its ability to adopt in the ever-changing business

environment’. Having now established definition of outsourcing in regard to hotel

management, it is important to understand what research has been published in regard to

this particular topic. This will now be addressed in the next section.

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2.3 Outsourcing’s revolution

Recent research of Kakabadse and Kakabadse (2000) suggests that outsourcing practices can

be traced back to eighteen century England. However, Hatonen and Eriksson (2009) argue,

that it was not until the 1980’s, when outsourcing strategies became widely adopted by

management practitioners. Since then, outsourcing revolution has started to have a

significant impact on fiercely competitive business world (Quinn, 2000; Carson, 2007).

Intensified competition and consequent development of outsourcing market created

entirely new arenas of possibilities as well as models, according to which firms were able to

divest and decompose their operations (Hatonen and Eriksson, 2009). Thus, the opportunity

to study outsourcing phenomenon has brought a lot of attention among the scholars.

Chronology of outsourcing streams can be divided into three stages (see Table 2). In the first

stage (until the late 1980’s), in order to cut the costs and achieve profit maximisation firms

were focusing on domestic ‘traditional outsourcing’ of non core business activities (Hatonen

and Eriksson, 2009). Literature suggests that this early process of outsourcing has its roots in

transaction cost economics theory (TCE) (Coase, 1977; Williamson, 1995; Tate et al., 2009).

TCE argue that if a firm has an ability to buy the product or service cheaper than it can

produce it internally, it should buy a product or service in the market (Williamson, 1995). In

regard to this theory the main strategic outcome of outsourcing beneficial to organisation,

was profit maximisation.

In the second stage (early 1990’s to early 2000), it was the time when a term ‘strategic

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outsourcing’ has started to emerge (Quinn and Himler, 1994). The companies no longer

aimed to cut the costs through outsourcing, but also started to look for external skills and

knowledge of the vendors, which would further complement the areas where they were lack

of expertise (Hatonen and Eriksson, 2009). In addition, at this stage outsourcing practices

have expanded from domestic to international borders. From academic perspective, this

practical stream has found its image in resource based view theory (RBV), which suggests

that in order to achieve a competitive advantage, firm should acquire superior resources,

knowledge, skills and competencies from external sources (Barney, 1991; Mclvor, 2000;

Aubert et al., 2004; Espino-Rodriguez and Padron-Robaina, 2006). The main strategic

outcomes of this approach were competitive edge, cost minimisation, process improvement

and capability enhancement (Hatonen and Eriksson, 2009).

According to Lawton and Michaels (2001) in the last and final stage (from early 2000

onwards), outsourcing has started to grow so dramatically that it had become a norm rather

than competitive advantage exception. Globalisation process, improved technology and

communication links all together created a global source pool, thanks to which the

companies have been given the opportunities to restructure their businesses (Doig et al.,

2001). Hatonen and Eriksson (2009) noted that modern ‘transformational outsourcing’ aims

at changing the paradigm (i.e. targeting new enterprise) and it is also used as a tool for

transforming firms from all the industries towards flexible organisational forms.

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Table 2. The outsourcing’s revolution

Source: Hatonen and Eriksson (2009)

2.3 Why hotels outsource?

Recent study of Donada and Nogatchewsky (2009) argue that outsourcing is seen as a

relatively new topic in hotel management literature. However, different view has been

presented by Hemmington and King, who in year 2000 published a paper in which they

argued that outsourcing strategies have been widely adopted by both independent and

chain affiliated hotels. Likewise, a decade later in 2011, Lamminmaki confirmed this view

and pointed out that due to the nature of hotel operations, hotels are particularly well

suited for outsourcing strategies. This is down to the fact that most the hotels, offer a wide

range of products and services such as: rooms, food and beverage, laundry, conference and

banqueting etc., which are subject to demand (Harrison and Enz, 2010). When the demand

for hotel product or service is low, the overheads related to staffing and general hotel

operations are high. As a solution to this issue, hotel managers started to use flexible

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workers in supply chain partnerships between hotel and employment agencies (Soltani and

Wilkinson, 2010). Such partnerships between employment agencies and hotels are being

perceived as outsourcing strategy, which is specifically tailored to provide the right people at

the right place in the right time (Soltani and Wilkinson, 2010).

In a similar vein, literature of Boone (1997) pointed out that for years hotel companies have

struggled with unprofitable and very often unmanageable food and beverage operations. To

overcome this issue hotels started to co-brand with well known restaurant brands, thanks to

which the needs of their guests were satisfied and rent from food and beverage department

was guaranteed (Bone, 1997). As an example of such arrangements is Gordon Ramsey at

London’s Savoy, Christopher Gavin at Windows at London’s Hilton Park Lane or Toby Randal

at London Intercontinental Hotel Park Lane. In this context, co-branding is seen as an

outsourcing strategy, in which food and beverage is referred to as a non-core hotel activity

(Harrison and Enz, 2010), and co-branded restaurant is seen as specialised service/product

provider (Hemmington and King, 2000).

Previous studies have conclusively shown that outsourcing strategy can increase hotel’s

ability to outsource its non-core activities while focusing on its core business and its

distinctive competences (Espino-Rodriguez and Gill-Padilla, 2005; Bolat and Yilmaz, 2009;

Gonzalez et al., 2010). According to Harrison and Enz (2010) hotel’s core business include:

reception, in-room services, and advertising, whereas all other activities are non-core.

Hottman and Addams (1996) argue that these non-core hotel activities should be

outsourced to companies that possess specialised people, knowledge, resources, and

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management expertise to perform these functions in a more effective manner. This belief

has also been confirmed in studies of Lee and Kim (1999) and Lee (2001) who both

suggested, that outsourcing of non-core activities can improve quality of firm’s products and

processes, or give access to technologies, capabilities and knowledge which are internally

scarce.

2.3 Successful outsourcing relationships

Literature of Gonzalez et al., (2010) perceives outsourcing as a long term contractual

relationship between a hotel and the vendors. Such outsourcing relationships are

characterised by the series of interrelated and ongoing exchanges (Kim and Lee, 1999),

which have to be effectively managed in order to achieve the desired outcome (Kim and

Chung, 2003). The need to manage outsourcing relationships on a long term basis has

become critical for both the client and the service provider (Lee et al., 2003; Bharadwaj et

al., 2010).

Numerous studies from industries such as information systems, manufacturing or logistics

have already attempted to explain how to effectively manage outsourcing process in order

to achieve the desired outcome of this strategy (Kakabadse and Kakabadse, 2002; Kim and

Chung, 2003; Goles and Chin, 2005; Han et al., 2008; Bharadwaj et al., 2010). It has been

suggested in the book of Barrar and Gervais (2005) that successful outsourcing relationship

occurs only when both parties can achieve their objectives, so called win-win situation.

Likewise, study of Han et al. (2008) argue, that successful outsourcing relationship is

achieved when a client has been able to achieve an access to specialised products/services

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and gained ability to focus on its core competencies, whereas vendor kept delivering his

initial promises. From another angle, research of Bharadwaj et al. (2010) demonstrated that

successful relationship occurs only when both parties are willing to extend the scope of

already existing deal or simply renew the contract.

As it can be noticed, the topic on successful outsourcing management has recently become

more significant in academic literature, with several studies addressing this issue. However,

according to Gonzalez et al., (2010) literature on management outsourcing relationships has

not been yet developed in the hotel sector to the same extent as in other sectors (e.g.

information systems, logistics, manufacturing etc.) This creates a gap in academic literature

and thus, this issue will now be addressed.

2.4.1 Outsourcing relationships in hotel industry

In 2010, Gonzalez et al., conducted the content analyses of papers in regard to level of

development of outsourcing strategies adopted by hotel managers. Content analysis

reported that within the last ten years there have been around 20 papers published in this

field of study. These studies can be grouped into five topic areas (see Table 3).

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Table 3. Empirical studies on outsourcing and hotel management from year 2000 onwards

Topics Studies

Functional Areas:

InformationSystems

Accounting

Food and Beverage

Facility Management

Paraskevas and Buhalis, 2002; Espino-Rodriguez and Gil Padilla, 2005, Espino-Rodriguez and Gil Padilla 2007;

Burgess, 2007; Lamminmaki, 2008;

Hemmington and King 2000; Barrows and Ginnakopulous, 2006;

Chan, 2008;

Organisational PerformanceBolat and Yilmaz, 2009; Chatzoglou and Sarigiannidis, 2009; Espino-Rodriguez and Padron-Robaina, 2005b; Shang, et al., (2008); Chan, 2008;

Reasons and RisksParaskevas and Buhalis, 2002; Lam and Han, 2005; Espino-Rodriguez and Padron-Robaina, 2005; Barrows and Ginnakopulous, 2006; Lamminmaki, 2011;

Determining Factors:

Asset Specificity

Uncertainty and Frequency

Espino-Rodriguez et al., 2008; Lamminmaki, 2005;

Lamminmaki, 2009;

Interorganisational Relationships:

Provider Change Costs

Relational Capabilities

Donada and Nogatchewsky, 2009;

Rodriguez-Diaz and Espino-Rogriguez, 2006;

Source: Modified Table from Gonzalez et al., (2010)

From above table it can be noticed that only two studies are placed within the topic of

interorganisational relationships (i.e. Rodriguez-Diaz and Espino-Rodriguez, 2006; Donada

and Nogatchewsky, 2009). These two papers have significant importance to this

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dissertation, because they confirm how undeveloped the topic on management of

outsourcing relationships in hotel industry is in comparison to the other industries.

The article of Rodriguez-Diaz and Espino-Rodriguez (2006) focuses on the study of creating

relational capabilities in the hotel sector. Relational capabilities are referred to superior skills

to manage resources between the companies. They are steadily created as a result of long

lasting successful outsourcing relationship between the hotel and service/product provider

(Rodriguez-Diaz and Espino-Rodriguez, 2006). In addition, Rodriguez-Diaz and Espino-

Rodriguez (2006) proposed the model of relationship in the hotel-tourism supply chain, in

which they pointed out that high levels of trust and commitment between the parties are

necessary, although not sufficient enough to fully compliment the process integration

leading to creation of relational capabilities. Saying that no further explanation was given as

to how trust and commitment can be measured, and whether they are in the group of the

success factors of outsourcing in the relationships between a hotel and its vendors.

A second study in regard to interorganisational relationships was conducted in 2009 by

Donada and Nogatchewsky. Research of these scholars analyse the role of positive and

negative emotions in decisions about supplier switching in the hotel industry (Donada and

Nogatchewsky, 2009). Study indicates that if a hospitality firm has invested in specific assets

and developed organisational routines for dealing with its existing supplier, it will be

motivated to successfully maintain this relationship in order to save on high switching costs

(Donada and Nogatchewsky, 2009). As for one of independent variables measuring

‘suppliers switching’ Donada and Nogatchewsky (2009) have used relational exchange

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norms. According to Heide and John (1992, pp. 34) ‘relational exchange norms are based on

the expectation of mutuality of interest, essentially prescribing stewardship behaviour, and

are designed to enhance the well-being of the relationship as a whole’. The findings of

Donada and Nogatchewsky (2009) research confirm that if the hotel predicts that switching

suppliers will cost them time, money and effort, they will be motivated to maintain their

relationship with their current supplier. Although, the study lacks of explanation in regard

to, what factors rule to management relationships.

2.4 Summary

In this chapter, the review of literature on outsourcing development in practice and

academia was given. This has set up the background for broader understanding of what

outsourcing is about. A variety of definitions were discussed with a particular reference to

hotel management. A detailed discussion on outsourcing activities in hotel management and

other industries was provided. The analysed in this chapter studies indicated the similarity of

benefits for all the industries, coming from outsourcing strategies.

This chapter has also provided a detailed review of academic research in regard to

outsourcing in hotel management during last ten years. The analysis of this research pointed

out that the topic on management outsourcing relationships in hotel industry is in its early

stages in comparison to other industries, and thus the opportunity for further research was

identified. Hence, the following chapter will address this issue.

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Chapter 3: Research Hypothesis and Research Model

‘‘Coming together is a beginning; keeping together is progress; working together is

success.’‘- Henry Ford (in Bravard and Morgan, 2006).

3.1 Introduction

The primary aim of this chapter is to identify the hospitality industry specific success factors

in outsourcing relationships. Although, due to very early stage of the research on this topic,

this will be achieved through analysis of academic literature on success factors in

outsourcing of other industries. Once this is achieved, the research hypotheses and research

model will be proposed, aiming to test whether the key success factors of outsourcing

relationships from industries such: as IS which is purely technical are the same or different

as for the Hotel industry which is purely focused on the customer services.

3.2 Review of empirical studies on success factors in outsourcing relationship

The book of Bravard and Morgan (2006) indicate that the initial step to successful

outsourcing relationship is by creation of a solid contract with all the rules and regulations,

applicable to both parties. This view is has also been supported by study of Webb and

Laborde (2005) who established that the contract should address the specific products and

services to be delivered, the terms of payment and what the vendor will provide if he fail to

deliver what has been promised. However, even though the contract is accordingly written

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to mutual benefit of the both parties, some academics argue that this is not enough to

achieve successful outsourcing relationship and claim, that relationship between the client

and vendor very often depends on intangible factors, which cannot be easily incorporated

into a contract.

The topic in regard to intangible success factors in outsourcing relationship has been widely

developed in information systems literature (Goles and Chin, 2005). The analyses of the

literature indicate that there are around 23 potential factors that can influence on successful

outsourcing relationship between client and vendor (see Table 4). Out of these 23 factors:

trust, commitment, interdependence, communication, conflict resolution and cultural

similarity were the most frequently used factors by researchers (Goles and Chin, 2005).

When looking at these key success factors proposed by information systems literature, it can

be noticed that some of these factors have also appeared in hotel management literature

(Rodriguez-Diaz and Espino-Rodriguez, 2006; Donada and Nogatchewsky, 2009). Therefore,

as the similarity exists, this research will take an opportunity to investigate whether the key

factors that build successful outsourcing relationships in information systems industry also

play the rule of key factors that build successful outsourcing relationships but in the hotel

industry.

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Table 4. Outsourcing relationship factors

Source: Goles and Chin (2005)

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3.3.1 Trust

Relationship trust is known as ‘the firm’s belief that another company will perform actions

that will result in positive outcomes for the firm, as well as not take unexpected actions that

will result in negative outcomes’ (Anderson and Narus, 1990, pp. 45). Trust can bring long

term benefits into interorganisational relationships such as: increased mutual cooperation,

integrity, reliability and honesty (Morgan and Hunt, 1994; Klepper, 1995).

The relationship between trust and outsourcing success has been widely investigated by

scholars (Lee and Kim, 1999; Duening and Click, 2005; Goles and Chin, 2005). Trust seems to

have special importance in success of outsourcing in hotel management. This is down to the

fact that hotels need to be able to trust their outsourced employees that they will maintain

the hotel standards and look after the hotel guests. Such importance was very apparent in

the interview data collected by Lamminmaki (2011) from some general hotel managers.

Another classic example is study of Han et al., (2008) where analysis of 267 questionnaires

distributed among senior executives of the IT firms reported, that high levels of trust had a

very significant positive impact on outsourcing success. Similarly, interview conducted by

Webb and Laborde (2005, p. 425) with one of the senior executives argues that ‘in the firmly

grounded relationship built on trust, the outsourcer will be more likely to invest in value

initiatives, because to outsourcer trusts the client to take the investment seriously and in

good faith. If trust is lacking, then the outsourcer has little incentive to make the effort, and

the client has little reason to value the effort’.

26

In accordance to above studies, trust seems to be important in outsourcing relationships

between hotel and the vendors, to the extent that outsourcing success can be achieved

thanks to high level of trust between the parties (Medina-Munoz and Garcia-Falcon, 2000).

Thus, the following hypothesis is proposed:

H1: Trust is positively related to perceived success of outsourcing in relationships between Hotel and the Vendors.

3.3.2 Commitment

Commitment is another factor, which has been widely recognised by academics as a key

factor of measuring the magnitude of outsourcing relationship (Heide and John, 1992;

Morgan and Hunt, 1994; Ring and Van de Ven, 1994; Kanter, 1994; Willcocks and Kern,

1998; Bove and Johnson, 2001; Han et al., 2008). Study of Morgan and Hunt (1994, p.23)

defines relationship commitment as ‘an exchange partners believing that an ongoing

relationship with one another is so important as to warrant maximum efforts at maintaining

it; that is worth working on, to ensure that it endures indefinitely’. In similar vein, Dwyer et

al., (1987, p. 19) defines commitment as ‘a degree of the pledge of relationship continuity

between exchange partners’. Likewise, Kanter (1994, p. 103) describes relationship

commitment as ‘a willingness to connect the fates of the companies’.

In his research, Wilson (1995) argued that commitment implies importance of the

relationship to the partners and a desire to continue the relationship into future. According

to Brown and Wilson (2005), in 2004 survey conducted by The Global Outsourcing

27

Partnership reported, that commitment was one of three most important factors in

outsourcing relationships. In the recent study conducted by Lee and Kim (1999) the analyses

of the participants’ questionnaires also reported, that commitment was significantly

associated with successful outsourcing relationship in terms of both client and the vendor.

Likewise, in the relationship between hotels and vendors, high levels of commitment are

necessary to develop relational capabilities, which in this case are perceived as outsourcing

success (Rodriguez-Diaz and Espino-Rodriguez, 2006). Based on this belief, following

hypothesis is proposed:

H2: Commitment is positively related to perceived success of outsourcing in relationships between Hotel and the Vendors.

3.3.3 Communication

Communication has also been considered by majority of literature as another important

factor of successful outsourcing relationship. In the study conducted by Lamminmaki (2011)

one of the hotel managers pointed out that communication is a crucial ingredient to

outsourcing success. It has also been argued in the study of Lee and Kim (1999) that

effective communication between client and vendor is essential in order to achieve intended

objectives such as successful relationship. In the book of Duening and Click (2005, pp. 154)

effective communication is seen as ‘skills that prevent simple problems from becoming

complex’. Anderson and Narus (1990, pp.44) defines communication as ‘formal as well as

informal sharing of meaningful and timely information between firms’.

28

In 1992, results of marketing research analysis carried out by Heidi and John pointed out

that communication quality is associated with successful client vendor relationship. This

view has also been confirmed in 2005, by Webb and Laborde who argued that effective

communication between client and vendor in outsourcing relationship, allows for the

formation of mutual respect and understanding, which can greatly increase the length of an

outsourcing relationship. Study of Mohr and Spekman (1994) and Han et al., (2008) both

agree that communication in order to be effective needs to have qualities such as: accuracy,

timeliness, adequacy and credibility. The analysis of research conducted by Lee and Kim

(1999) also indicate that there is positive relationship between high levels of communication

quality and outsourcing success. Likewise, in the relationships between hotels and travel

agents, which were explored in a recent study of Knight (1994), high level of communication

quality is considered to be in highly significant positive association with overall success of

outsourcing relationship. Based on this and other studies, the following hypothesis is

proposed:

H3: Communication is positively related to perceived success of outsourcing in relationships between Hotel and the Vendors.

3.3.4 Interdependence

As firms join their powers in order to achieve mutually beneficial outcome, they

acknowledge that each is dependent on one another (Heide and John, 1992). The ideology

29

of interdependence suggests that the client and vendor have complimentary assets of skills,

hence they need to work together to achieve their organisational goals (Kanter, 1994; Goles

and Chin, 2005). Results of Henderson’s (1990) and Kanter’s (1994) research both noticed

that interdependence also belongs to the group of factors which have significant influence

on success of interorganisational outsourcing relationship. Study carried out by Monczka et

al. (1998) in regard to suppliers and manufacturers found that interdependence is a factor

which plays very important role in relationship success between two organisations.

Interdependence seems to be important factor in successful relationship building between

the hotel and the vendor. Therefore, the following hypothesis is proposed:

H4: Interdependence is positively related to perceived success of outsourcing in relationships between Hotel and the Vendors.

3.3.5 Conflict resolution

Interorganisational conflict is considered as a common feature of relationships between

organisations (Medina-Munoz and Garcia-Falcal, 2000). Interorganisational conflict has been

defined as ‘a degree of incompatibility of activities, resource share, and goals between the

partners’ (Lee and Kim, 1999, pp. 36). Conflict resolution refers to ‘amicably replacing

disagreement with agreement’ (Goles and Chin, 2005, pp. 54). There is a large volume of

published literature describing the conflict resolution in interorganisational relationship

(Anderson and Narus, 1990; Kanter, 1994; Morgan and Hunt, 1994; Lee and Kim, 1999;

Medina-Munoz and Garcia-Falcal, 2000; Blumenberg et al., 2008). Academics argue that

when the conflicts are resolved, they can increase efficiency and in consequence contribute

to successful interorganisational relationship (Medina-Munoz and Garcia-Falcal, 2000).

30

Conflict resolution routines are activities that formalise and facilitate documented and

commonly applied escalation procedures (Blumenberg et al., 2008). Mohr and Spekman

(1994) argue that conflict resolution techniques include: joint problem solving, persuasion,

smoothing, arbitration and severe resolution. The analysis of their research reported that

the usage of constructive conflict resolution techniques is positively associated with more

successful partnerships (Mohr and Spekman, 1994). Similarly, research of Medina-Munoz

and Garcia-Falcal (2000) reported conflict solving techniques such as the ones proposed by

Mohr and Spekman (1994) are significantly positively associated with overall success

between hotel and travel agents. Building on these studies, following hypothesis are

proposed:

H5: Conflict Resolution is positively related to perceived success of outsourcing in relationships between Hotel and the Vendors.

3.3.6 Cultural similarity

Organisational culture is also a factor which has been several times studied by academics, in

order to measure successful outsourcing relationship. Mullins (2010, pp. 749) defines

organisational culture as: ‘collection of traditions, values, policies, beliefs, and attitudes that

constitute a pervasive context for everything we do and think in an organisation’. Cultural

similarity is the extent to which the parties can cooperate with each other’s beliefs about

what values, behaviours, goals and policies are important or unimportant, appropriate or

inappropriate and right of wrong (Morgan and Hunt, 1994). Minimizing cultural differences

31

allows client and the vendor to make a greater progress in achieving compatible objectives

(Han et al., 2008).

The importance of ensuring that suppliers’ employees understand the hotel’s culture has

been highlighted in study of Espino-Rodriguez and Gill-Padilla (2006). According to findings

of Hemmington and King (2000), cultural similarity is considered to be a key to successful

relationship between hotel and outsourced hotel restaurant. The important thing to

remember is that the 5* hotels need to co-brand with 5* restaurant otherwise the

relationship will fail, because the needs of the customers may not be satisfied. Therefore,

the following hypothesis is proposed:

H6: Cultural Similarity is positively related to perceived success of outsourcing in relationships between Hotel and the Vendors.

Figure 1. Research Model

32

Trust

Commitment

Communication

Interdependence

Perceived Success ofOutsourcing

Source: This study

3.3 Summary

In this chapter, previous studies and models about outsourcing relationships have been

reviewed. At first, the broad literature has been explored. The analysis of the studies

pointed out that trust, commitment, interdependence, communication, conflict resolution

and cultural similarity are the key most popular factors used by scholars to measure the

magnitude of the perceived outsourcing success between the client and the vendor. Based

on these key factors the hypotheses have been proposed and research model designed. It

The following chapter will present methodological approach used in this study.

Chapter 4: Methodology and Methods used

4.1 Introduction

The main methodological issues addressed in this chapter concern the matters such as: the

kind of data which has been collected; what kind of strategy was used to collect the data;

what kind of sampling method was used to collect the primary data; how the collected data

has been analysed; and finally strengths and weaknesses of the methods used in order to

33

ConflictResolution

CulturalSimilarity

collect the data for this research. The following sections will address all above mentioned

issues.

4.2 Research strategy

According to Bryman and Bell (2003) research strategy is referred to as a general orientation

of social research was conducted. Research strategy is also referred to as the general plan of

how the researcher will go about achieving the primary aim of the research (Saunders et al.,

2009). This plan should contain clear objectives, specified sources from which data will be

collected, considered all potential constrains (i.e. access to data, time, location and money)

and ethical issues (Saunders et al., 2009).

There are two main research strategies, quantitative and qualitative (Bryman and Bell,

2003). Qualitative research usually emphasizes words rather than quantification in the

collection and analysis of data (Bryman and Bell, 2003). As a research strategy it is

inductivist, constructivist, and interpretivist, however qualitative researchers do not always

subscribe to all three of these features (Bryman and Bell, 2003). On the other hand,

quantitative research usually emphasises on quantification in the collection and analysis of

data. As a research strategy it is deductivist and objectivist and incorporates a natural

science model of the research process (Bryman and Bell, 2003). The extent to which the

researcher is clear about the theory at the beginning of the research raises important

question concerning the design of the research project (Saunders et al., 2009). This is

whether the researcher should adopt a deductive quantitative approach in which the theory

and hypothesis are developed and research strategy is designed to test hypothesis, or the

34

inductive qualitative approach in which data is collected and theory developed as a result of

the data analysis (Saunders et al., 2009).

As discussed in the previous chapters, the primary aim of this study is to investigate what

are the key success factors of outsourcing relationship proposed by literature; and to what

extent these key factors influence on success of outsourcing relationships in UK’s hotel

industry. Literature of Bryman and Bell (2003) suggests that the rationale for adopting a

deductive quantitative strategy is most appropriate when theories need to be tested and

relationships need to be established between a dependent variable and one or more

independent variables. Therefore, it was decided that the quantitative deductive strategy

was the best method for this study’s investigation (Figure 2). In order to identify the gap in

literature and state hypothesis, past research regarding theories and models of outsourcing

relationships were reviewed and analysed in depth. Primary quantitative data has been

collected via self completion online questionnaires. Furthermore, collected data was

analysed by SPSS v.15 for Windows.

Figure 2. Process of deduction

35

Theory

Data Collection

Findings

Hypothesis

Source: Bryman and Bell (2003)

4.3 Research design

Research design provides a framework for the collection and analysis of data (Saunders et

al., 2009). This research adopted a positivism approach, by using existing theories and

frameworks to develop the research hypotheses. According to Collis and Hussey (2009)

there are four main strategies associated with positivism philosophy: experimental study,

survey, cross-sectional study and longitudinal study. Due to deductive nature of this

research, survey approach was adopted. The objective of survey strategy is to collect

primary or secondary data from a sample, with a view to generalizing the results to a

population (Collis and Hussey, 2009). Often obtained by using self-administered

questionnaire to a sample, survey strategy allows researcher to collect the quantitative data

which can be further analysed by descriptive and inferential statistics (Saunders et al., 2009).

4.3.1 Secondary data collection

Secondary data is referred to as a data which has been used for a research projects that

were originally conducted for some other purpose (Saunders et al., 2009). Generic

information sources of secondary data came from textbooks, academic journal review

36

Hypothesis Confirmed or Rejected

Revision of Theory

articles, academic journal annual indices, abstracts, encyclopaedias etc (Jankowicz, 2005).

According to Bryman and Bell (2003) secondary data analysis offers numerous benefits such

as: cost and time efficiency, good quality of the data, opportunity for longitudinal and cross

cultural analysis. In quantitative research, secondary data is used to set the foundations for

hypothesis.

In order to achieve the objectives of this research, secondary data was obtained from

specialised textbooks, e-books, academic data bases such as: Pro Quest, Abi Inform,

Emerald, Ebsco Host, and other internet web sites related to outsourcing phenomenon. The

analyses of theories regarding outsourcing relationships have set the good foundations for

research hypothesis and research model (Figure 1).

4.3.2 Sample

Collis and Hussey (2009) argue that suitable sampling technique is one of the key primary

elements of successful research. For the population of the sample, this research targeted

both males and females’ hotel managers involved in managing outsourcing processes in the

United Kingdom. Due to difficulty in obtaining the sampling frame, which would acquire

more time and financial resources, the non-probability snowball sampling method was used.

Snowball sampling is known as non random sampling method, because there is no way of

knowing the precise extent of the population from which it would have to be drawn, in

other words there is no accessible sampling frame (Bryman and Bell, 2003). With this

approach to sampling, researcher makes initial contact with a small group of people who are

relevant to the research topic and then uses these to establish the contact with others

(Bryman and Bell, 2003).

37

In this study, through personal connections 22 initial respondents were contacted, who then

administered to their network colleagues the link to website with self-completion

questionnaire. To get an accurate relationship between the variables, this research needed a

sample of at least 100 respondents. In order to achieve this minimum requirement, the

primary data was collected during 12 days and resulted with 117 fully completed

questionnaires.

4.3.4 Primary data collection process

As it has been mentioned in the previous section, the primary data for this research has

been collected through a self completion internet-mediated questionnaire, which has been

administered via web-link to the website. One of the biggest advantages of the self

completion questionnaire is that it gives freedom to the respondents to answer the

questions without the aid of an interviewer (Bryman and Bell, 2003). In addition, self

completion internet-mediated questionnaires are cheap and quick to administer and they

are convenient to respondents, which makes them more responsive (Bryman and Bell,

2003).

4.3.5 Questionnaire design

To design the self completion questionnaire, this study adopted the measurement items

(Table 5) from previous studies examining the same variables (i.e. Mohr and Spekman, 1994;

Medina-Munoz and Garcia-Falcon, 2000; Goles and Chin, 2005; Han et al., 2008; Bharadwaj

38

et al., 2010). However, some modifications were necessary in order to fit the items into this

study context.

Self completion questionnaire (Appendix 1) comprised of total 28 questions, out of which 25

were so called ‘rating questions’ aiming to collect the respondent’s opinions on the key

factors of successful outsourcing relationship in UK’s hotel industry. According to Saunders

et al., (2009) the rating questions most frequently use the likert-style rating scale in which

respondent is asked about how strongly he or she agrees or disagrees with a statement or

series of statements usually on a four-, five-, six-, or seven-point rating scale. The likert-scale

is an effective tool to code and record data (Fisher, 2007). In this study to measure the

respondent’s opinions, 5 point likert-scale was used. This is because other studies from

which the measures were adopted also used 5 point likert-scale. Hence, the answer options

were labelled and coded accordingly: 1-strongly disagree, 2-disagree, 3-not sure, 4-agree,

and finally 5-strongly agree (Appendix 2).

The remaining 3 questions were ‘categorical’ types of questions. The categorical types of

questions are designed so that each respondent’s answer can fit only one category

(Saunders et al., 2009). This research has used 3 categorical types of questions in order to

collect the data regarding demographics of respondents (i.e. respondent’s sex, age and

position in the company). In order to see the SPSS coding procedures please refer to

Appendix 2.

Table 5. Measurement Items Item Source

Trust

T1 We and our vendor can be trusted to no take advantage of each other.

(Goles and Chin, 2005)

39

T2 We and our vendor are sincere at all the times. (Han et al., 2008)

T3 The relationship between us and vendor is marked by a great harmony.

(Mohr and Spekman, 1994)

T4 We and our vendor can be trusted and all times. (Medina-Munoz and Garcia-Falcon, 2000)

Relationship Commitment

RC1 We and our vendor do our best to maintain the relationship.

(Han et al., 2008)

RC2 We and our vendor always try to keep each other promises.

(Han et al., 2008)

RC3 We and our vendor are willing to commit resources to sustain the relationship.


Communication

C1 Communication between us and our vendor is timely.


C2 Communication between us and our vendor is accurate.


C3 Communication between us and our vendor is adequate.


C4 Communication between us and our vendor is complete.


C5 Communication between us and our vendor is credible.


Interdependence

I1 We and our vendor effectively carry out activities that the other is dependent on.


I2 We and our vendor successfully complete tasks that the other relies on.


I3 If we wanted to we could easily switch to another service provider.

(Medina-Munoz and Garcia-Falcon, 2000)

I4 If our service provider wanted to he could easily (Medina-Munoz and

40

switch to another hotel. Garcia-Falcon, 2000)

Conflict resolution

CR1 Disagreements between us and vendor are almost always successfully resolved.


CR2 The process of resolving conflicts between us and vendor is effective.


CR3 We always jointly solve the problems. (Medina-Munoz and Garcia-Falcon, 2000)

Cultural similarity

CS1 We and our vendor have compatible corporate cultures.


CS2 We and our vendor accept each other’s culture. (Goles and Chin, 2005)

CS3 In our relationship we and our service provider are similar to the processes of problem solving, decision making, and communication.

(Lee and Kim, 1999)

Perceived Success of Outsourcing

PSO1 The vendor is an excellent company to do business with.


PSO2 We are satisfied with all aspects of the relationship.


PSO3 We want to renew or extend the existing contract.

(Bharadwaj et al., 2010)

Source: This study

4.3.6 Pilot testing

As suggested by Saunders et al., (2009) before using the questionnaire to collect data,

questionnaire should be first pilot tested. The purpose of pilot test is to refine the

questionnaire so that respondents will have no problems in answering the questions and

41

there will be no problems in recording the data (Saunders et al., 2009). In a similar vein,

Bryman and Bell (2005) suggest that the desirability of pilot test of measurement

instruments is not solely to do with trying to ensure that survey questions operate well, pilot

test also has a role in ensuring that the research instruments as a whole function well.

In this study pilot questionnaire has been electronically distributed (i.e. via email) to a

sample of 3 respondents. Chosen sample included: 2 restaurant managers and 1 hotel

director. The analysis of pilot survey reported that the time to complete the questionnaire

has taken on average around 6 minutes. The wording, layout and order of questions were

tested and analysis reported that everything is understandable, clear and in good order, and

no changes were needed. Such positive results have given a green light to launch a real

questionnaire.

4.3.7 Ethical considerations

Ethical approval for carrying this research has been approved by Business School. In order to

follow University’s code of ethics, letter explaining objectives of the research and

information regarding researcher were attached to the front of the questionnaire so that the

respondents were fully aware what the research is about, that the participation is voluntary

and they can withdraw from the survey at any stage (Appendix 1; Appendix 3). Respondents

were also assured that the questionnaire is fully confidential and will only be used for the

purposes of this project and later destroyed. In addition, to ensure even greater

confidentiality of the respondents, information regarding respondent’s name, address or

contact details was not acquired. With all information provided up front the questionnaire,

participants were able to read and agree to the terms and conditions and begin with the

survey.

42

4.4 Data analysis

The primary data collected through self completion questionnaire was analysed through

Statistical Package for the Social Sciences software ‘SPSS v. 15.0 for Windows’. SPSS software

has in the menu a large number of different statistics which can be used in analysis of a large

number of samples, and hence academics prefer this software for quantitative data analysis

(Pallant, 2007). According to Bryman and Bell (2003) two most prominent criteria for

evaluation of quantitative research are its reliability and validity.

4.4.1 Validity

Validity in relation to questionnaires refers to the ability of the questionnaire to measure

what has been intended to measure (Bryman and Bell, 2003). This can be done through

several ways such as: face validity, internal validity, content validity, criterion related validity

and construct validity (Saunders et al., 2009). In order to ensure the validity of the

measures, all of the measures used in this study were adopted form previous academic

studies. In addition, as this study uses constructs, the most appropriate way to validate the

measures is by construct validity (Bryman and Bell, 2003). Furthermore, according to Field

(2009) construct validity can be gauged by applying factor analyses method. Therefore, in

this project this method has been used.

43

4.4.2 Reliability

For questionnaire in order to be valid it must be reliable (Saunders et al., 2009). Reliability of

the data is fundamentally concerned with issues of consistency of measures (Bryman and

Bell, 2003). Reliability of questionnaire is concerned with its robustness and whether or not

it will produce consistent findings at different times and under different conditions, such as

with different samples, or in the case of an interviewer-administered questionnaire, with

different interviewers (Saunders et al., 2009). One way of measuring reliability is through

measuring construct’s internal consistency (Bryman and Bell, 2003). The most popular

method of measuring internal consistency is Cronbach’s alpha (Pallant, 2007). In order to

measure the internal consistency of the constructs in this research, Cronbach’s alpha and

inter item correlations measures have been used.

4.4.3 Hypotheses testing method

In order to test the sated hypotheses in this dissertation standard multiple regressions has

been used. As suggested by Saunders (2009) multiple regression analysis is the process of

calculating a coefficient of multiple determination and regression equation using two or

more independent variables (i.e. trust, commitment, communication, interdependence,

conflict resolution and cultural similarity) and one dependent variable (i.e. perceived success

of outsourcing).

4.5 Summary

This chapter has discussed the research approach adopted in this study. Through a thorough

discussion it has justified why the chosen methods were most appropriate to achieve the

aims and objectives of the study. In a nutshell, this research has adopted quantitative

44

deductive strategy. Sampling method used in this research had character of non random

snowball sample. In order to collect quantitative primary data, self completion

questionnaire has been designed and electronically distributed to a sample of respondents.

Finally, the analysis of collected data were done through Statistical Package for the Social

Sciences software ‘SPSS v. 15.0 for Windows’.

Chapter 5: Analyses and findings

5.1 Introduction

This chapter provides the main analysis and findings regarding the data which has been

collected through self completion questionnaires and further analysed by SPSS v.15 for

Windows. At first the analysis regarding respondent’s demographics is given. This is followed

by analysis of reliability and validity of collected data. Finally, the hypotheses are tested and

findings are reported.

45

5.2 Respondent’s demographics

The final part of distributed self completion questionnaire (i.e. Q-26, Q-27, Q-28) included

questions regarding respondents demographics (i.e. gender, age and job title). Descriptive

statistics and frequency tables (Appendix 8) and appropriate charts were used in order to

analyse and present the collected primary data.

5.2.1 Respondents gender

The primary data collection process has taken 12 days and gathered 117 responses. Figure 3

clearly indicates that male respondents have strongly outnumbered female respondents, i.e.

out of 117 respondents 76 (64.96%) were male, whereas only 41 (35.04%) were female.

Figure 3. Gender of respondents

4135.04%Female

7664.96%Male

Female Malen=117

Are you a male or a female?

5.3.2 Respondents age

From the figure 4 it can be noticed that significant majority of the respondents fall into the

middle age group category of 28-32 years (34.2%), followed by 17.9% falling into 38-42 years

46

and 17.1% falling into relatively young age group of 23-27 years. 16.2% of respondents fall

into older group age category 43-47, whereas 11.1% fall into 38-42. Finally only 2.6% of

respondents were above 48 years of age and only 1 respondent was in category of 18-22

years.

Figure 4. Age group

48 and above

43-4738-4233-3728-3223-2718-22

Coun

t

40

35

30

25

20

15

10

5

02.6%

16.2%

11.1%

17.9%

34.2%

17.1%

0.9%

What is your age group?

n=117

5.3.3 Respondents’ occupancy

The respondents’ occupancy was divided into four groups. Figure 5 indicates that majority of

respondents (36.8%) were Restaurant Managers, followed by (29.9%) Housekeeping

Managers, (25.6%) Hotel Directors and finally Front Office Managers (7.7%).

47

Figure 5. Job title

n=117

Hotel Director Housekeeping Manager

Restaurant Manager

Front office manager

Coun

t

45403530252015105 7.7%

25.6%29.9%36.8%

What is your job title?

5.4 Reliability of the measures

As mentioned in the methodology section, in order to measure the reliability of the

constructs, Cronbach’s Alpha and Inter Item Correlations measures have been used

(Appendix 5). Ideally in order to be accepted, Cronbach’s Alpha value of a scale should be

above 0.7 (Bryman and Bell, 2003). However, alpha values are quite sensitive to the number

of items in the scale (Pallant, 2007). With the likert scales less than 10 points it is very

common that Cronbach’s value is quite low. In this case Pallant (2007) suggests that it may

be more appropriate to report the mean of inter item correlation for the construct, with

optimal range of 0.2 to 0.4.

From the table 6 it can be noticed that majority of constructs have strong internal reliability.

Communication has the strongest alpha value (.874), followed by Perceived Success of

Outsourcing (.867), Conflict Resolution (.846), Trust (.788) and Commitment (.772). Only two

constructs: Interdependence (.478) and Cultural Similarity (.652) reported alpha values

lower than respectable 0.7. Therefore, inter item correlation measures have been calculated

for these constructs. Inter item correlation for Interdependence reported .204, whereas for

48

Cultural Similarity .400. This means that reliability of these two constructs were also

accepted.

Table 6. Reliability of the measures

Construct Number of Items Cronbach’s’ Alpha (α)Inter item correlation

(Mean Value)Trust 4 .788 N/A

Commitment 3 .772 N/A

Communication 5 .874 N/A

Interdependence 4 .478 .204

Conflict Resolution 3 .846 N/A

Cultural Similarity 3 .652 .400

Perceived Success of Outsourcing

3 .867 N/A

5.6 Validity of the measures

As it has been mentioned in the methodology chapter, in this study in order to ensure the

validity of the constructs, the measurement items were adopted from previous studies

which measured the same variables (Table 5). In addition, to be even surer, factor analyses

have been conducted to measure each construct’s validity. According to Field (2009) factor

analysis is a multivariate technique which helps to identify whether the correlations

between a set of observed variables stem from their relationship to one or more latent

variables in the data, each of which takes the form of a linear model.

In this project the factor analyses were conducted through principal component analysis

method (PCA), which is known as multivariate technique for identifying the linear

49

components of a set of variables (Field, 2009). When conducting factor analyses tables such

as: Correlation Matrix, KMO and Bartlett's tests, Total Variance Explained and Component

Matrix were obtained (Appendix 6). As suggested by Field (2009) analysing correlation

matrix table is useful default method when all variables have been measured using the same

scales, in this study all items have been measured by 5-point likert scales. From the tables

presented in Appendix 6 it can be seen that all items have correlation coefficients above .30,

which justifies the strength of inter-item correlations between the items.

It can also be noticed from Appendix 5 that all values of Bartlett's test of sphericity, were

highly significant with p value < .05. In a similar vein, KMO’s test for measuring the

sampling adequacy reported that all values were in range from .565 to .784, which means

that patterns of correlations were good (Hutcheson and Sofroniou, 1999). From the total

variance table (Appendix 7) it can be noticed which components have reported Eingenvalues

greater than 1, and their % explanation of the total variance of the construct. Finally, table 7

reports the values of the total variance and values of the factor loadings of each of the

scales.

Table 7. Construct validity of the measuresScale Factor Loadings Variance extracted (%)

Trust 61.909%Trust 1 .758Trust 2 .842Trust 3 .787Trust 4 .758

Commitment 69.024%Commitment1 .883Commitment2 .902Commitment3 .691

50

Communication 76.216%Communication1 .980Communication2 .823Communication3 .870Communication4 .853Communication5 .831

Interdependence 53.246%Interdependence1 .518Interdependence 2 .520Interdependence 3 .849Interdependence 4 .831

Conflict Resolution 76.549%Conflict Resolution1 .878Conflict Resolution2 .879Conflict Resolution3 .867

Cultural Similarity 60.320%Cultural Similarity1 .830Cultural Similarity2 .675Cultural Similarity3 .815

Perceived Success of Outsourcing 79.158%

Perceived Success of Outsourcing1 .893Perceived Success of Outsourcing2 .839Perceived Success of Outsourcing3 .934

From the above presented table it can be noticed that all factor loadings values of the scales

are in range from .518 to .980, and variance explained ranges from 53.246% to 79.158%,

which is a very good result.

5.5 Hypotheses testing

In relation to data analysis section in methodology chapter, standard multiple regression

method was the most appropriate technique to test the hypotheses stated in this

dissertation. In order to conduct the multiple regression tests, Perceived Success of

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Outsourcing (PSO) construct has been chosen for the dependent variable, whereas Trust,

Commitment, Communication, Interdependence, Conflict Resolution and Cultural Similarity

were all chosen for independent variables. ‘Enter’ option was the method chosen for

regression (Appendix 7). All statistical options have been ticked. To plot regression, ZRESID

(Y-Axis) was against ZPRED (X-Axis). According to Field (2009) this sort of regression plot is

useful to determine whether assumptions of random errors and homoscedasticity have

been met. The analysis of multiple regression consisted of three processes (Figure 6).

Figure 6. Process of multiple regression analysis

Source: This study (based on Field, 2009)

5.5.1 Assumptions checking procedures

As suggested by Field (2009) there are statistics that can be used to check the assumptions

of multicollinearity (collinearity diagnostics), normality of deviation (scatterplots) and serial

independence of errors (Dubrin-Watson).

Multicollinearity is defined as situation in which two or more variables are very closely

linearly related (Field, 2009). From the analysis presented in the table correlations (Appendix

7) it can be noticed that 2 independent variables i.e. Communication (.770) and Cultural

52

Multiple regression analysis

1. Assumptions checking procedures

2. Model evaluation

3. Analysis of independent variables

Similarity have very strong positive relationship with dependent variable - Perceived Success

of Outsourcing. The other 4 i.e. Trust (.642), Conflict Resolution (.610), Interdependence

(.590) and Commitment (.586) reported also strong positive relationships with Perceived

Success of Outsourcing. The analysis from the same table also reports that there is a quite

high correlation between two independent variables (i.e. communication and cultural

similarity .746). On the other hand, all other independent variables have lower correlation

values between each other. In addition, from the table coefficients (Appendix 7) it can be

noticed that all variables have reported the average value of variance inflation factor (VIF)

(which is a measure of multicollinearity) less than 10, whereas the tolerance value in all

cases was greater than .2. This means that there were no problems with multicollinearity

biasing the regression model (Field 2009).

In order to check whether there is any deviation from normality, Normal P-P Plot of

Regression Standardized Residual has been produced (Appendix 8). Based on this plot it can

be noticed that the points tend to lie in a reasonably straight diagonal line from the bottom

left to the top right. This indicates that there is no major deviation from normality (Field,

2009). In a similar vein, from the Scatter plot Regression Standardized Predicted Value

(Appendix 8) it can be noticed that the majority of points are scattered without any specific

pattern and are focused around the centre.

Dubrin-Watson test (Table 8) has been conducted in order to find the correlations between

the errors in the regression model. According to Field (2009) as a very conservative rule of

thumb, values less than 1 or greater than 3 are definitely cause for concern and also value of

2 meaning that the residuals are uncorrelated. In this research’s model, Dubrin-Watson

value reported 1.775, indicating that there is a positive correlation between residuals.

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5.5.2 Model Evaluation

In the model summary (Table 8) R Square reported value of .743. According to Field (2009)

this means that model can explain 74.3% of the variance of the dependent variable (i.e.

Perceived Success of Outsourcing).

Table 8. Model Summary (b)

Model

R R Square

Adjusted R Square

Std. Error of the Estimate

Durbin-Watson

1 .862(a) .743 .729 .27063 1.775 a Predictors: (Constant), Cultural Similarity, interdependence, Trust, Conflict Resolution, Commitment, Communication b Dependent Variable: PSO

From the model summary table it can also be noticed that Adjusted R Square value is

equal .729. As suggested by Field (2009) Adjusted R Square gives an idea of how well the

model generalizes the findings. Field (2009) also suggests that ideally Adjusted R Square

value should be the same or very close to the Value of R Square. In this study model

Adjusted R Square explains 72.9% of the variance of the dependent variable (i.e. PSO). Based

on Table 9, all results of the model are statistically significant (i.e. Sig. < .05).

Table 9. ANOVA(b)

ModelSum of Squares df

Mean Square F Sig.

1 Regression 23.243 6 3.874 52.893 .000(a)Residual 8.056 110 .073Total 31.299 116

a Predictors: (Constant), Cultural Similarity, interdependence, Trust, Conflict Resolution, Commitment, Communicationb Dependent Variable: PSO

54

5.5.3 Independent variables – predictors.

Table 10 i.e. Coefficients presents the values that indicate how each one independent

variable contribute to the prediction of the dependent variable. In other words, statistics

presented in this table have been used as tools in order to test hypotheses stated in this

dissertation.

Table 10. Coefficients (a)

Model

Unstandardized Coefficients

Standardized Coefficients

t Sig.B

Std. Error Beta

1 (Constant) -2.521 .503 -5.014 .000 Cultural

Similarity .218 .110 .153 1.979 .050

ConflictResolution .143 .074 .122 1.942 .055

Commitment .045 .081 .038 .556 .579 Communication .250 .062 .330 4.041 .000 Trust .305 .082 .251 3.728 .000 interdependence .511 .144 .206 3.548 .001

a Dependent Variable: PSO

H1: Trust is positively related to perceived success of outsourcing in relationships between Hotel and the Vendors.

From the table 10 it can be noticed that the sig. value of trust equals .000, which means that

it is less than respectable .05. Such value indicates that there is a significant positive

relationship between trust and perceived success of outsourcing in relationships between

Hotel and the Vendors, and hence the H1 is accepted (Saunders et al., 2009). The Trust’s

Beta value equals .251, which means that this independent variable is second strongest

predictor of variance of the perceived success of outsourcing relationship between hotel

and the vendors.

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H2: Commitment is positively related to perceived success of outsourcing in relationships between Hotel and the Vendors.

It can be noticed that the sig. value of Commitment in table 10 equals .579 which means

that is greater than respectable .05. Such value indicates that there is no positive statistically

significant relationship between Commitment and perceived success of outsourcing in

relationship between hotel and vendors, and hence H2 is rejected (Saunders et al., 2009).

The commitment’s Beta value equals .038, which means that this independent variable is

the weakest predictor of variance of the perceived success of outsourcing relationships

between hotel and the vendors.

H3: Communication is positively related to perceived success of outsourcing in relationships between Hotel and the Vendors.

Table 10 also reports that the sig. value of communication equals .000 which means that it is

less than respectable .05. Such value indicates that there is positive statistically significant

relationship between communication and perceived success of outsourcing in relationship

between hotels and the vendors, and hence H3 is accepted (Saunders et al., 2009). The

communication’s Beta value equals .330, which makes it the strongest predictor of variance

of the perceived success of outsourcing relationships between hotel and the vendors.

H4: Interdependence is positively related to perceived success of outsourcing in relationships between Hotel and the Vendors.

As presented in the table 10, the sig. value of interdependence equals .001 which means

that it is less than respectable .05. Such value indicates that there is positive statistically

significant relationship between interdependence and perceived success of outsourcing in

relationship between hotels and the vendors, and hence H4 is accepted (Saunders et al.,

2009). The interdependence’s Beta value equals .206, which makes it the third strongest

56

predictor of variance of the perceived success of outsourcing relationships between hotel

and the vendors.

H5: Conflict Resolution is positively related to perceived success of outsourcing in relationships between Hotel and the Vendors.

From the table 10 it can be noticed that the sig. value of conflict resolution equals .055

which means that it is greater than respectable .05. Such value indicates that there is no

positive statistically significant relationship between interdependence and perceived success

of outsourcing in relationship between hotels and the vendors, and hence H5 is rejected

(Saunders et al., 2009). The conflict resolution’s Beta value equals .122, which makes it the

second weakest predictor of variance of the perceived success of outsourcing relationships

between hotel and the vendors.

H6: Cultural Similarity is positively related to perceived success of outsourcing in relationships between Hotel and the Vendors.

Finally, table 10 reports that the sig. value of cultural similarity equals .050 which means

that it is equal to respectable .05. Such value indicates that there is no positive statistically

significant relationship between interdependence and perceived success of outsourcing in

relationship between hotels and the vendors, and hence H6 is rejected (Saunders et al.,

2009). The communication’s Beta value equals .153, which makes it the third weakest

predictor of variance of the perceived success of outsourcing relationships between hotel

and the vendors.

Table 11. Hypotheses - results summaryHypothesis Results

Hypothesis 1 Accepted

Hypothesis 2 Rejected

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Hypothesis 5 RejectedHypothesis 6 Rejected

According to Field (2009) it is also important to report the values of squared semi-partial

correlations. Semi-partial correlations are the measures of the relationship between two

variables, in other words these are the measures of the variance in PSO that all independent

variables share (Field, 2009). From the results reported in the table 12, it can be noticed that

Communication (.0380), Trust (.0324) and Interdependence (.0296) are the three main

contributors to the total variance of Perceived Success of Outsourcing in relationships

between a Hotel and the Vendors.

Table 12. Part correlations

Construct

Correlation

Part Squared Part

Trust .180 .0324

Commitment .027 .0007

Communication .195 .0380

Interdependence .172 .0296

Conflict Resolution .094 .0089

Cultural Similarity .096 .0092

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5.5.4 Summary

This chapter provided the analysis and finding of the primary data which has been collected

from the hotel manager’s involved in outsourcing. At first the analyses of respondent’s

demographics have been reported, indicating that there was a strong domination of male

respondents. The analyses of reliability and validity of the constructs reported that all the

constructs are reliable and valid. Finally, hypotheses testing reported that out of 6

hypotheses H1, H3 and H4 were accepted, whereas H2, H5 and H6 were rejected.

Chapter 6: Discussions, recommendations and conclusions

6.1 Introduction

This final chapter focuses on discussions of the findings presented in the previous chapter.

Discussions are aiming to find the connection between initial objectives of this project and

the findings of the primary research. This is followed by practical implications and

conclusions. Furthermore, limitations and potential avenues for future research are also

suggested.

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6.2 Discussions

Right from the beginning this project was focused on making a fundamental contribution to

understanding, what are the key success factors in outsourcing relationships in different

industries; and what is the relationship between these key factors and perceived success of

outsourcing in relationships between a hotel and the vendors, based on study UK’s Hotel

Industry. In order to achieve this, extensive amount of literature has been examined, and

research gap has been identified. Analysis of literature pointed out that: trust, commitment,

communication, interdependence, conflict resolution and cultural similarity are the most

frequently used factors by academics, in order to measure the magnitude of perceived

success of outsourcing relationships. This has led to proposition of six hypotheses and a

research model (Figure 1). The analyses confirmed that out of these six hypotheses, three

(i.e. H1, H3, H4) were accepted and other three (i.e. H2, H5, H6) were rejected. This means

that some of the key success factors of outsourcing relationship in hotel industry turned out

to be different from other industries (i.e. manufacturing, information systems, and

manufacturing). Although, some of the factors turned out to be the same. In addition,

findings have shown that proposed in this dissertation factors were able to explain 73%

(Adjusted R Square = .729) of the variance of perceived success of outsourcing in

relationships between a hotel and the vendors.

The findings confirmed that communication between a hotel and the vendors is the

strongest and highly significant predictor (SC Beta Value = .330) of perceived success of

outsourcing in relationships between a hotel and the vendors. These findings correspond

with the findings of Lamminmaki (2011) who identified that communication is crucial to

outsourcing success in relationships between the hotel and vendors. These findings also

60

correspond with the findings from Information Systems industry (Goles and Chin, 2005). This

study has also proved that accuracy, timeliness, adequacy, completeness and credibility of

communicated information, are essential if the goals of successful outsourcing relationship

are to be achieved (Mohr and Spekman, 1994; Han et al., 2008).

As suggested by Anderson and Narus (1994), from a manufacturing point of view trust is a

belief that another company will perform actions that will result in positive outcomes for the

firm, as well as not take unexpected actions that will result in negative outcomes. The

findings in this project revealed that trust in relationships between a hotel and the vendors,

is seen as second highly significant strongest predictor (SC Beta Value = .251) of perceived

success of outsourcing. These findings are also in line with the findings of Goles and Chin

(2005) and Han et al., (2008) from Information systems literature, which also strongly

emphasise on trust as one of the key building blocks of outsourcing success. Finally, it is

important to understand that the high levels of trust are strongly associated with success of

outsourcing in relationships between a hotel and the vendors, and therefore both parties

should pay special attention to it.

Interdependence is another strong and highly significant predictor (SC Beta Squared = .206)

of successful outsourcing in relationships between a hotel and the vendors. The findings

presented in this study match with the findings of Anderson and Narus (1990) who studied

relationship interdependence between distributors and manufacturing firms. Furthermore,

this study’s findings indicate that the hotels and the vendors in order to achieve success in

outsourcing relationships need to very effectively carry the activities which other are

dependent on.

61

As suggested in the literature review, commitment was a second strongest predictor (after

trust) used by academics in order to measure the magnitude of success in outsourcing

relationships. However, analyses of primary data collected in this project turned out to be

different. In this project commitment was the weakest and insignificant predictor (SC Beta

Value = .038; p value = .579) of success in outsourcing relationships between a hotel and the

vendors. These findings are very opposite to findings of Lee and Kim (1999) who focused

their research on Information Technology industry and who found that commitment is very

significant and strong predictor of outsourcing success. The potential reason for such result

could be a possibility that some of the respondents were at their final stage of the

outsourcing contract or just simply were not satisfied with the services of their vendors and

hence, reflected levels of commitment have lowered down.

In relation to the literature review, conflict resolution was another factor which has been

used several times in order to measure the perceived success of outsourcing relationships.

The findings of this study reported that conflict resolution was the second weakest and

insignificant predictor (SC Beta Squared = .122; p value = .055) of perceived outsourcing

success in relationships between a hotel and the vendors. The possible explanation for such

result could be the fact that the measures were adopted form Goles and Chin (2005) who

focused their study on information systems industry, where attention to detail in the

contract probably is much greater than in the hotel industry and hence, effective conflict

resolution techniques play even greater role.

Finally, cultural similarity was the third weakest and insignificant predictor (SC Beta Squared

= .153, p value = .05) of perceived success of outsourcing relationships between a hotel and

the vendors. These findings are also significantly opposite to the findings presented by

62

previous studies (i.e. Kern, 1997; Willcocks and Kern, 1998) which argued that in order to

achieve outsourcing success it is necessary for the both parties to have the same

organisational cultures. In a similar vein, one of the reasons why the results may be

different, is that the cultural similarity may be very important at the beginning of the

contract, however with the time it may become less important and this is the reason that is

why respondents may have not pay too much attention to it (Lee and Kim, 1999).

Alternatively, as suggested by Goles and Chin (2005) after a few years of contract the

cultures of both parties evolved and become more tolerable to one another.

6.3 Practical implications and conclusions

As previously mentioned the generic aim of this dissertation was to make a fundamental

contribution to understanding, what are the key success factors in management outsourcing

relationships in different industries; and what is the relationship between these key factors

and perceived success of outsourcing in relationships between a hotel and the vendors,

based on study UK’s Hotel Industry. The extensive review of academic literature in this

project, helped to indentify the gap in existing research. This review of literature pointed out

that topic regarding management of outsourcing relationships in the hotel sector is at its

very early stage in compare to industries such as: IT or Manufacturing. Many researchers

have pointed out that success of outsourcing relationships does not only depend on

carefully written contract. There are many other governing factors which cannot be

incorporated into a contract. Based on published articles from the field of outsourcing in

hotel management, marketing, manufacturing and information systems, the key success

factors of outsourcing relationships have been identified (i.e. trust, commitment,

63

communication, interdependence, conflict resolution and cultural similarity). This has led to

proposition of 6 hypotheses and research model (Figure 1). Due to budget and time

constrains it has been difficult to obtain the population frame for this research. Hence,

snowball sample technique targeting hotel managers responsible for outsourcing

management has been used. During 12 days of data collection 117 responses have been

obtained. As snowballing sample technique belongs to non-probability sampling group, it is

difficult to justify whether it represents the whole population.

The outcome from statistical analyses of primary data collection, pointed out that in practice

communication between hotel and its vendors is the major strongest and highly significant

predictor of perceived success in outsourcing. This means that in practice hotel managers

involved in outsourcing have to pay special attention to communication. When information

between the client and the vendor is being communicated, it is very important to maintain

the high levels of accuracy, timeliness, adequacy, completeness and credibility. In addition, it

can be recommended that in hospitality industry, business partners must maintain the high

levels of communication flow, in order to achieve their outsourcing strategy objectives.

The practical implications coming from this study also suggest that trust is a second most

important predictor of outsourcing success in relationships between a hotel and the

vendors. It can be then concluded, that the hotel managers need to be able to trust their

business partners that they will train their staff in the way that they will maintain the hotel’s

standards and look after the hotel’s guests. In addition, if both parties want to enhance

their level of trust, they should maintain the high levels of loyalty and always be sincere

towards each other.

64

Finally, in practice interdependence is another highly significant predictor of outsourcing

success in relationships between the hotels and the vendors. Therefore, it can be concluded

that the levels of perceived success of outsourcing in relationships between hotel and the

vendors will go up, only if both parties are committed to successful fulfilment of the

activities and tasks that another party is dependent on. In addition, according to the

respondents who participated in this study, outsourcing strategy will result with greater

success if both parties are not so easy to switch to another business partner.

6.4 Study Limitations

This study has few limitations. First of all, non probability, convenience snowballing sample

method was used. Bryman and Bell (2003) argue that this method should ideally be used in

qualitative research, rather than quantitative. When this method is used it is rather difficult

to identify what is the population frame and how representative the sample is. However,

provided in this research sample can facilitate further research on the topic of outsourcing

relationships in hotel industry. Another limitation of this research is place from which the

data has been collected. Due to time and financial constrains, data has been collected by self

completion internet based questionnaire, which has been administered through snowball

sample method. Therefore, it is difficult to identify where respondents were located and

hence, difficult to generalise the results beyond the specific research context. To further

generalise the research findings future data should be collected from considerable part in

the UK from a randomly selected sample.

65

6.5 Future research

There are several potential avenues coming from this research. First of all, future

researchers can use randomly selected sample, which can be generalised to the whole

population.

Secondly, future research can focus on the hotel’s vendors as the respondents of primary

data collection, in order to find their views on management outsourcing relationships, which

potentially may be different to the views of hotel managers.

Thirdly, this research can be replicated with the sample from other than UK country.

Furthermore, future research could also focus on measuring the other key success factors of

outsourcing presented in the table 2.

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Appendix 1. Questionnaire

Please continue to the next page

74

Please tick () in the box that best matches your opinion:

Part 1: The factors which influence the success in outsourcing relationships.

Trust in outsourcing relationship is the extent to which respondents agree

with the following:

Questions Strongly disagree Disagree Not

sure Agree Strongly agree

1We and our vendor can be trusted to not take advantage of each other.

2We and our vendor are sincere at all the times.

3The relationship between us and vendor is marked by a great harmony.

4 We and our vendor can be trusted at all times.

Commitment in outsourcing relationship is the extent to which respondents agree with the

following:



5We and our vendor do our best to maintain the relationship.

6We and our vendor always try to keep each other promises.

7We and our vendor are willing to commit resources to sustain the relationship.


75

Communication in outsourcing relationship is the extent to which

respondents agree with the following:



8Communication between us and our vendor is timely.

9Communication between us and our vendor is accurate.

10Communication between us and our vendor is adequate.

11Communication between us and our vendor is complete.

12Communication between us and our vendor is credible.

Interdependence in outsourcing relationship is the extent to which respondents agree with the

following:



13We and our vendor effectively carry out activities that the other is dependent on.

14We and our vendor successfully complete tasks that the other relies on.

15If we wanted to we could easily switch to another service provider.

16If our service provider wanted to he could easily switch to another hotel.


76

Conflict Resolution in outsourcing relationship is the extent to which respondents agree with

the following:



17Disagreements between us and vendor are almost always successfully resolved.

18The process of resolving conflicts between us and vendor is effective.

19We always jointly solve the problems.

Cultural Similarity in outsourcing relationship is the extent to which

respondents agree with the following:



20We and our vendor have compatible corporate cultures.

21We and our vendor accept each other’s culture.

22

In our relationship we and our vendor have similar attitude to the processes of problem solving, decision making, and communication.


77

Success in outsourcing relationship is perceived as the extent to which respondents

agree with the following:



23The vendor is an excellent company to do business with.

24We are satisfied with all aspects of the relationship.

25We want to renew or extend the existing contract.

Part 2: Personal Information:



18-22 23-27 28-32 33-37 38-42 43-47 48 and above


Front OfficeManager

Restaurant Manager

HousekeepingManager

HotelDirector

Thank you very much for your participation.

78

Male Female

Appendix 2. Ethical form

Business School

Research Ethics

Company Confidentiality Form

This is to confirm that the research project on ‘Measuring the key success factors of

outsourcing success in relationships between a hotel and the vendors. Study of UK’s Hotel

Industry’’ undertaken by Krzysztof Krecikij (1029330) in part fulfilment of the degree of Msc

International Business Studies will be viewed for assessment purposes only, by the

University/ Business School from July 2011 until September 2011 and then be archived in a

secure place. Participant information will be anonymized/kept confidential.

Date: [INSERT DATE]

Signature of Contact in Organization: [INSERT CONTACT SIGNATURE]

Signature of Student: Krzysztof Krecikij

Signature of Supervisor: [Dr Habin Lee]

Appendix 3. SPSS coding and labelling

SPSS Coding: Q26 SPSS Coding: Q28

79

SPSS Coding: Q28 SPSS Coding: from Q1 to Q25

Appendix 4. Frequency tables and descriptive statistics

80

Statistics




N Valid 117 117 117Missing 0 0 0


Frequency Percent Valid PercentCumulative

PercentValid Male 76 65.0 65.0 65.0

Female 41 35.0 35.0 100.0Total 117 100.0 100.0



PercentValid 18-22 1 .9 .9 .9

23-27 20 17.1 17.1 17.928-32 40 34.2 34.2 52.133-37 21 17.9 17.9 70.138-42 13 11.1 11.1 81.243-47 19 16.2 16.2 97.448 and above 3 2.6 2.6 100.0Total 117 100.0 100.0



PercentValid Front office manager 9 7.7 7.7 7.7

Restaurant Manager 43 36.8 36.8 44.4Housekeeping Manager 35 29.9 29.9 74.4Hotel Director 30 25.6 25.6 100.0Total 117 100.0 100.0

Descriptive Statistics

81

N Minimum Maximum Mean Std. DeviationWe and our vendor can be trusted to not take advantage of each other.

117 3.00 5.00 4.0855 .50125

We and our vendor are sincere at all the times. 117 2.00 5.00 3.9744 .48176

The relationship between us and vendor is marked by a great harmony.

117 2.00 5.00 4.0342 .62879

We and our vendor can be trusted and all times. 117 2.00 5.00 3.8974 .56301

We and our vendor do our best to maintain the relationship.

117 3.00 5.00 4.2735 .51902

We and our vendor always try to keep each other promises.

117 2.00 5.00 4.1453 .56117

We and our vendor are willing to commit resources to sustain the relationship.

117 2.00 5.00 4.0427 .49815

Communication between us and our vendor is timely.

117 11.60 21.00 17.2103 1.76554

Communication between us and our vendor is accurate.

117 2.00 5.00 4.1197 .52788

Communication between us and our vendor is adequate.

117 2.00 5.00 4.0342 .43414

Communication between us and our vendor is complete.

117 2.00 5.00 4.0598 .57671

Communication between us and our vendor is credible.

117 3.00 5.00 4.1282 .46495

We and our vendor effectively carry out activities that the other is dependent on.

117 3.00 5.00 4.0769 .35120

We and our vendor successfully complete tasks that the other relies on.

117 3.00 5.00 4.1026 .38021

If we wanted to we could easily switch to another service provider.

117 3.00 5.00 4.0085 .27841

If our service provider wanted to he could easily switch to another hotel.

117 3.00 5.00 4.0171 .32118

Disagreements between us and vendor are almost always successfully resolved.

117 2.00 5.00 4.0342 .50739

The process of resolving conflicts between us and 117 2.00 5.00 4.0427 .48054

82

vendor is effective.We always jointly solve the problems. 117 2.00 5.00 3.9915 .53330

We and our vendor have compatible corporate cultures.

117 2.00 5.00 4.0000 .41523

We and our vendor accept each other's culture. 117 2.00 5.00 4.2137 .53866

In our relationship we and our vendor have similar attitude to the processes of problem solving, decision making, and communication.

117 2.00 5.00 3.9915 .46416

The vendor is an excellent company to do business with.

117 2.00 5.00 4.2137 .61348

We are satisfied with all aspects of the relationship. 117 2.00 5.00 3.9316 .50389

We want to renew or extend the existing contract.

117 2.00 5.00 4.1368 .62844

Are you a male or a female? 117 1.00 2.00 1.3504 .47916

What is your age group? 117 1.00 7.00 3.8034 1.43982What is your job title? 117 1.00 4.00 2.7350 .93212Valid N (listwise) 117

Appendix 5. Reliability of the constructs

Scale: Trust

Case Processing Summary

N %Cases Valid 117 100.0 Excluded(a) 0 .0 Total 117 100.0

a Listwise deletion based on all variables in the procedure.

Reliability Statistics

83

Scale: Commitment





Cronbach's Alpha N of Items

.772 3

Scale: Communication






.874 5

84


.788 4

Scale: Interdependence






.478 4

Summary Item Statistics

Mean Minimum Maximum RangeMaximum / Minimum Variance N of Items

Inter-Item Correlations .204 .065 .577 .512 8.919 .035 4

Scale: Conflict Resolution






.846 3

85

Scale: Cultural Similarity






.652 3

Summary Item Statistics

Mean Minimum Maximum RangeMaximum / Minimum Variance N of Items

Item Means 4.068 3.991 4.214 .222 1.056 .016 3Inter-Item Correlations .400 .318 .537 .219 1.690 .011 3

Scale: Perceived Success of Outsourcing (PSO)






.867 3

86

Appendix 6. Construct validity – factor analysis

Scale: Trust

87

Correlation Matrixa

1.000 .545 .456 .398

.545 1.000 .544 .531

.456 .544 1.000 .473

.398 .531 .473 1.000

.000 .000 .000

.000 .000 .000

.000 .000 .000

.000 .000 .000

We and our vendor can betrusted to not takeadvantage of each other.We and our vendor aresincere at all the times.The relationship betweenus and vendor is markedby a great harmony.We and our vendor can betrusted and all times.We and our vendor can betrusted to not takeadvantage of each other.We and our vendor aresincere at all the times.The relationship betweenus and vendor is markedby a great harmony.We and our vendor can betrusted and all times.

Correlation

Sig. (1-tailed)

We and ourvendor can betrusted to not

takeadvantage ofeach other.

We and ourvendor are

sincere at allthe times.

Therelationshipbetween us

and vendor ismarked by a

greatharmony.

We and ourvendor can betrusted and all

times.

Determinant = .312a.

KMO and Bartlett's Test

.784

132.6206

.000

Kaiser-Meyer-Olkin Measure of SamplingAdequacy.

Approx. Chi-SquaredfSig.

Bartlett's Test ofSphericity

Total Variance Explained

ComponentInitial Eigenvalues Extraction Sums of Squared Loadings

Total % of Variance Cumulative % Total % of Variance Cumulative %1 2.476 61.909 61.909 2.476 61.909 61.909

88

2 .604 15.103 77.0123 .513 12.836 89.8484 .406 10.152 100.000

Extraction Method: Principal Component Analysis.

Component Matrixa

.758

.842

.787

.758

We and our vendor can betrusted to not takeadvantage of each other.We and our vendor aresincere at all the times.The relationship betweenus and vendor is markedby a great harmony.We and our vendor can betrusted and all times.

1

Component

Extraction Method: Principal Component Analysis.1 components extracted.a.

Scale: Commitment

Correlation Matrix(a)

89

We and our vendor do our

best to maintain the relationship.

We and our vendor always

try to keep each other promises.

We and our vendor are willing to commit

resources to sustain the

relationship.Correlation We and our vendor do

our best to maintain the relationship.

1.000.750 .388


.750 1.000 .440


.388 .440 1.000

Sig. (1-tailed) We and our vendor do our best to maintain the relationship.

.000 .000


.000 .000


.000 .000

a Determinant = .349


.618

120.1733

.000





2.071 69.024 69.024 2.071 69.024 69.024.682 22.741 91.764.247 8.236 100.000

Component123

Total % of Variance Cumulative % Total % of Variance Cumulative %Initial Eigenvalues Extraction Sums of Squared Loadings


90

Component Matrixa

.883

.902

.691

We and our vendor doour best to maintainthe relationship.We and our vendoralways try to keepeach other promises.We and our vendor arewilling to commitresources to sustainthe relationship.

1

Component


Scale: Communication

Correlation Matrixa

1.000 .846 .816 .844 .759

.846 1.000 .697 .543 .499

.816 .697 1.000 .612 .661

.844 .543 .612 1.000 .711

.759 .499 .661 .711 1.000

.000 .000 .000 .000

.000 .000 .000 .000

.000 .000 .000 .000

.000 .000 .000 .000

.000 .000 .000 .000

Communicationbetween us and ourvendor is timely.Communicationbetween us and ourvendor is accurate.Communicationbetween us and ourvendor is adequate.Communicationbetween us and ourvendor is complete.Communicationbetween us and ourvendor is credible.Communicationbetween us and ourvendor is timely.Communicationbetween us and ourvendor is accurate.Communicationbetween us and ourvendor is adequate.Communicationbetween us and ourvendor is complete.Communicationbetween us and ourvendor is credible.

Correlation

Sig. (1-tailed)

Communication betweenus and ourvendor is

timely.

Communication betweenus and ourvendor isaccurate.

Communication betweenus and ourvendor isadequate.

Communication betweenus and ourvendor iscomplete.

Communication betweenus and ourvendor iscredible.


91


.690

590.63010

.000





3.811 76.216 76.216 3.811 76.216 76.216.576 11.526 87.742.346 6.910 94.652.237 4.737 99.388.031 .612 100.000

Component12345



Component Matrixa

.980

.823

.870

.853

.831

Communicationbetween us and ourvendor is timely.Communicationbetween us and ourvendor is accurate.Communicationbetween us and ourvendor is adequate.Communicationbetween us and ourvendor is complete.Communicationbetween us and ourvendor is credible.

1

Component


92

Scale: Interdependence

Correlation Matrixa

1.000 .070 .081 .065

.070 1.000 .236 .197

.081 .236 1.000 .577

.065 .197 .577 1.000

.228 .192 .244

.228 .005 .016

.192 .005 .000

.244 .016 .000

We and our vendoreffectively carry outactivities that the other isdependent on.We and our vendorsuccessfully completetasks that the other relieson.If we wanted to we couldeasily switch to anotherservice provider.If our service providerwanted to he could easilyswitch to another hotel.We and our vendoreffectively carry outactivities that the other isdependent on.We and our vendorsuccessfully completetasks that the other relieson.If we wanted to we couldeasily switch to anotherservice provider.If our service providerwanted to he could easilyswitch to another hotel.

Correlation

Sig. (1-tailed)

We and ourvendor

effectivelycarry out

activities thatthe other isdependent

on.

We and ourvendor

successfullycomplete

tasks that theother relies

on.

If we wantedto we could

easily switchto another

serviceprovider.

If our serviceprovider

wanted to hecould easily

switch toanother hotel.



.565

54.3486

.000




93


ComponentInitial Eigenvalues Extraction Sums of Squared Loadings

Total % of Variance Cumulative % Total % of Variance Cumulative %1 1.730 53.246 53.246 1.730 53.246 53.2462 .984 24.606 67.8513 .864 21.610 89.4624 .422 10.538 100.000


Component Matrix(a)

Component

1

We and our vendor effectively carry out activities that the other is dependent on.

.518

We and our vendor successfully complete tasks that the other relies on.

.520

If we wanted to we could easily switch to another service provider.

.849

If our service provider wanted to he could easily switch to another hotel.

.831

Extraction Method: Principal Component Analysis.a 1 components extracted.

94

Scale: Conflict Resolution

Correlation Matrixa

1.000 .666 .638

.666 1.000 .641

.638 .641 1.000

.000 .000

.000 .000

.000 .000

Disagreements betweenus and vendor arealmost alwayssuccessfully resolved.The process of resolvingconflicts between us andvendor is effective.We always jointly solvethe problems.Disagreements betweenus and vendor arealmost alwayssuccessfully resolved.The process of resolvingconflicts between us andvendor is effective.We always jointly solvethe problems.

Correlation

Sig. (1-tailed)

Disagreements between usand vendorare almost

alwayssuccessfully

resolved.

The processof resolving

conflictsbetween usand vendoris effective.

We alwaysjointly solve

the problems.



.730

143.9303

.000





2.296 76.549 76.549 2.296 76.549 76.549.369 12.311 88.860.334 11.140 100.000

Component123



95

Component Matrixa

.878

.879

.867

Disagreements betweenus and vendor arealmost alwayssuccessfully resolved.The process of resolvingconflicts between us andvendor is effective.We always jointly solvethe problems.

1

Component


Scale: Cultural Similarity

Correlation Matrixa

1.000 .347 .537

.347 1.000 .318

.537 .318 1.000

.000 .000

.000 .000

.000 .000

We and our vendor havecompatible corporatecultures.We and our vendor accepteach other's culture.In our relationship we andour vendor have similarattitude to the processesof problem solving,decision making, andcommunication.We and our vendor havecompatible corporatecultures.We and our vendor accepteach other's culture.In our relationship we andour vendor have similarattitude to the processesof problem solving,decision making, andcommunication.

Correlation

Sig. (1-tailed)

We and ourvendor havecompatiblecorporatecultures.

We and ourvendor accepteach other's

culture.

In ourrelationshipwe and our

vendor havesimilar

attitude to theprocesses of

problemsolving,decision

making, andcommunicatio

n.


96


.625

56.6293

.000





1.810 60.320 60.320 1.810 60.320 60.320.728 24.281 84.601.462 15.399 100.000

Component123



Component Matrixa

.830

.675

.815

We and our vendor havecompatible corporatecultures.We and our vendor accepteach other's culture.In our relationship we andour vendor have similarattitude to the processesof problem solving,decision making, andcommunication.

1

Component


97

Scale: Perceived Success of Outsourcing

Correlation Matrixa

1.000 .578 .796

.578 1.000 .683

.796 .683 1.000

.000 .000

.000 .000

.000 .000

The vendor is anexcellent companyto do business with.We are satisfiedwith all aspects ofthe relationship.We want to renew orextend the existingcontract.The vendor is anexcellent companyto do business with.We are satisfiedwith all aspects ofthe relationship.We want to renew orextend the existingcontract.

Correlation

Sig. (1-tailed)

The vendor isan excellentcompany todo business

with.

We aresatisfied withall aspects of

therelationship.

We want torenew or

extend theexistingcontract.



.684

186.8853

.000





2.375 79.158 79.158 2.375 79.158 79.158.438 14.612 93.770.187 6.230 100.000

Component123



98

Component Matrixa

.893

.839

.934

The vendor is anexcellent companyto do business with.We are satisfiedwith all aspects ofthe relationship.We want to renew orextend the existingcontract.

1

Component


Appendix 7. Multiple regression and correlations.

Variables Entered/Removedb

CulturalSimilarity,interdependence,Trust,ConflictResolution,Commitment,Communication

a

. Enter

Model1

VariablesEntered

VariablesRemoved Method

All requested variables entered.a.

Dependent Variable: PSOb.

99

Correlations

1 .641** .512** .309** .466** .503** .642**.000 .000 .001 .000 .000 .000

117 117 117 117 117 117 117.641** 1 .577** .369** .372** .492** .586**.000 .000 .000 .000 .000 .000117 117 117 117 117 117 117

.512** .577** 1 .519** .566** .746** .770**

.000 .000 .000 .000 .000 .000117 117 117 117 117 117 117

.309** .369** .519** 1 .398** .481** .590**

.001 .000 .000 .000 .000 .000117 117 117 117 117 117 117

.466** .372** .566** .398** 1 .576** .610**

.000 .000 .000 .000 .000 .000117 117 117 117 117 117 117

.503** .492** .746** .481** .576** 1 .714**

.000 .000 .000 .000 .000 .000117 117 117 117 117 117 117

.642** .586** .770** .590** .610** .714** 1

.000 .000 .000 .000 .000 .000117 117 117 117 117 117 117

Pearson CorrelationSig. (2-tailed)NPearson CorrelationSig. (2-tailed)NPearson CorrelationSig. (2-tailed)NPearson CorrelationSig. (2-tailed)NPearson CorrelationSig. (2-tailed)NPearson CorrelationSig. (2-tailed)NPearson CorrelationSig. (2-tailed)N

Trust

Commitment

Communication

interdependence

ConflictResolution

CulturalSimilarity

PSO

TrustCommitm

entCommuni

cationinterdependence

ConflictResolution

CulturalSimilarity PSO

Correlation is significant at the 0.01 level (2-tailed).**.

Correlations

1.000 .590 .642 .770 .586 .610 .714.590 1.000 .309 .519 .369 .398 .481.642 .309 1.000 .512 .641 .466 .503.770 .519 .512 1.000 .577 .566 .746.586 .369 .641 .577 1.000 .372 .492.610 .398 .466 .566 .372 1.000 .576.714 .481 .503 .746 .492 .576 1.000

. .000 .000 .000 .000 .000 .000.000 . .000 .000 .000 .000 .000.000 .000 . .000 .000 .000 .000.000 .000 .000 . .000 .000 .000.000 .000 .000 .000 . .000 .000.000 .000 .000 .000 .000 . .000.000 .000 .000 .000 .000 .000 .117 117 117 117 117 117 117117 117 117 117 117 117 117117 117 117 117 117 117 117117 117 117 117 117 117 117117 117 117 117 117 117 117117 117 117 117 117 117 117117 117 117 117 117 117 117

PSOinterdependenceTrustCommunicationCommitmentConflictResolutionCulturalSimilarityPSOinterdependenceTrustCommunicationCommitmentConflictResolutionCulturalSimilarityPSOinterdependenceTrustCommunicationCommitmentConflictResolutionCulturalSimilarity

Pearson Correlation

Sig. (1-tailed)

N

PSOinterdependence Trust

Communication Commitment

ConflictResolution

CulturalSimilarity

100

Model Summaryb

.862a .743 .729 .27063 .743 52.893 6 110 .000 1.775Model1

R R SquareAdjustedR Square

Std. Error ofthe Estimate

R SquareChange F Change df1 df2 Sig. F Change

Change StatisticsDurbin-Watson

Predictors: (Constant), CulturalSimilarity, interdependence, Trust, ConflictResolution, Commitment, Communicationa.

Dependent Variable: PSOb.

ANOVA (b)

Model Sum of Squares df Mean Square F Sig.

1 Regression 23.243 6 3.874 52.893 .000(a)Residual 8.056 110 .073Total 31.299 116

a Predictors: (Constant), Cultural Similarity, interdependence, Trust, Conflict Resolution, Commitment, Communicationb Dependent Variable: PS

Coefficientsa

-2.521 .503 -5.014 .000 -3.517 -1.524.305 .082 .251 3.728 .000 .143 .467 .642 .335 .180 .516 1.937.511 .144 .206 3.548 .001 .226 .796 .590 .320 .172 .697 1.434.250 .062 .330 4.041 .000 .127 .372 .770 .360 .195 .351 2.850.143 .074 .122 1.942 .055 -.003 .289 .610 .182 .094 .591 1.693.045 .081 .038 .556 .579 -.116 .207 .586 .053 .027 .499 2.004.218 .110 .153 1.979 .050 .000 .436 .714 .185 .096 .392 2.552

(Constant)TrustinterdependenceCommunicationConflictResolutionCommitmentCulturalSimilarity

Model1

B Std. Error

UnstandardizedCoefficients

Beta

StandardizedCoefficients

t Sig. Lower Bound Upper Bound95% Confidence Interval for B

Zero-order Partial PartCorrelations

Tolerance VIFCollinearity Statistics

Dependent Variable: PSOa.

101

Appendix 8. Regression’s scatterplots

Regression Standardized Predicted Value20-2-4

Regr

essio

n Stan

dard

ized

Resid

ual

4

2

0

-2

-4

Scatterplot

Dependent Variable: PSO

Observed Cum Prob1.00.80.60.40.20.0

Expe

cted C

um Pr

ob

1.0

0.8

0.6

0.4

0.2

0.0

Normal P-P Plot of Regression Standardized Residual

Dependent Variable: PSO

102

Documents

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