How Culture Effects JEU Company's Decision to Engage Outsourcing - Research Paper Example

To understand how culture affects decision making in outsourcing at the Jordan Electric Utilities, a qualitative study was undertaken. The research objectives and the questions were laid out in Chapter I. Hofstede's dimensions of culture and Handy's cultural types were used as the basis for analysis. The study found that power culture plays a dominant role at the JEUs and their focus is predominantly traditional. They focus on costs and profits and do not have a consumer-centric approach. The countries in which ABB operates come from diverse cultures and the study found that the culture of uncertainty avoidance is unique to Jordan's national culture.

The study concludes that ABB can influence the JEUs to change their decision on outsourcing utilities as it would enhance their profits while reducing the costs. However, they have to be convinced that the benefits could be perceived on a long-term strategy, focusing on sustainable factors, and not in the short-term. Outsourcing in any sector has been a debatable issue although its benefits are many. Outsourcing particularly holds importance in the current competitive business environment. After years of downsizing and emphasizing on core competencies, utilities can no longer rely solely on internal staff to meet the demands of designing, implementing, maintaining and optimizing their network infrastructure.

Supplier-clients relationships are being redefined through innovative partnerships that emphasize shared risk, common objectives, and business benefits tied to operating results. Technology advancements have changed the purchase environment in which the suppliers are held accountable for industry-specific solutions that impact overall operational efficiency including cost, productivity, and quality. However, corporate strategies are influenced by the organizational culture. Organizational culture can vary across countries, regions, and even sectors within the country.

Outsourcing takes place mainly to save on overhead costs or to induce short-term savings (JMD, 2000). However, cost-cutting should not be the primary motive for outsourcing as it is increasingly believed that outsourcing should be a strategic decision of the firm.