This study is based on the theory of Resource-Based View (RBV).

It was originally

proposed by Birger Wernerfelt on 1984 and was refined by Jay B. Barney on 1984

and other scholars.The resource-based view is an important theory in enhancing our

understanding of the outsourcing decision. In particular, the resource-based view can

assist in the analysis of organizational capabilities, which can link outsourcing to

organizational performance and in turn competitive advantage. It is possible to relate

the resource-based view to analyzing the capabilities of an organization relative to

competitors and suppliers in an outsourcing context.

In RBV, resources refer to assets, business processes, capabilities, the firm’s

attributes, knowledge, information, etc. controlled by a business to comprehend and

implement strategies aiming to enhance efficiency and effectiveness. The source of

firm resources can vary, coming from both within and outside the organization.

Internal resources are, for example, research and development capabilities, logistics,

brand management, and low-cost processes (Kozlenkova, Samaha & Palmatier,

2014); while external resources are for instance: the role of suppliers, customer

demand, technology change.  resources can be grouped into three categories,

namely physical capital resources, human capital resources and organizational

capital resources. Physical capital resources refer to company equipment, plant, its

access to raw materials, geographical location and they include the physical

technology utilized by a company. Human capital resources encompass experience,

intelligence, training, judgment, relationships, and insights from employees, such as

managers and workers in a company. Finally, organisational capital resources refer

to a company’s formal structure, the company’s formal and informal system, which

comprises planning, managing, and coordinating systems. Organisational resources

also relate to informal relations amongst divisions within a company and the

relationships between a company and its business environments.

The resource-based view advances the importance of firm-specific resources,

that is, those resources that maintain value in the context of the given firm's markets

and other resources that are difficult to replicate by other firms. Such resources

include managerial ability, customer relationships, brand reputation, and tacit

knowledge regarding specific manufacturing process. Resources are not the same as

competencies or capabilities. Rather, a firm's access to resources and ability to

mobilize and combine these resources in specific ways determine the firm's

competence in a given product area. As a firm gathers resources for one business,

these resources will, to differing extents, be sufficiently fungible for use in other

product lines or markets. Some of these resources will maintain excess capacities over

time, especially since the units required for operations in one area are not necessarily

consistent across multiple fields.