Efficiency and the Scope of Outsourced Services: A Client Firm’s Absorptive Capacity Perspective of Knowledge Intensive Services Ellimäki, Pia Aragón Correa, Juan Alberto Hurtado Torres, Nuria Esther Business process outsourcing Efficiency Absorptive capacity Exploitation Transaction cost economics The authors disclosed receipt of the following financial support for the research, authorship, and publication of this article: This research has been partially funded by the research grants ECO2016-75909-P (Spanish Ministry of Science, Education, and Universities), PID2019-106725GB-I00/SRA (Spanish Research Agency/10.13039/501100011033), and A-SEJ-291-UGR18 (FEDER, Regional Government of Andalucia). Purpose Strategic literature has focused on how economies of scale in a firm offering outsourcing may generate incentives for clients to increase the outsourced services, but there has been limited research on how the clients’ features may influence the scope of services that they hire with an outsourcing provider. This study analyzes whether a client’s efficiency motivates it to increase ties with a specific provider of knowledge-intensive services in the context of business process outsourcing (BPO). We further explore whether industry conditions moderate the relationship. Design/methodology/approach A research framework is developed consisting of three main hypotheses. We combine industry data and proprietary and financial data from a longitudinal sample of 107 client firms of a multinational outsourcing service provider to test our hypotheses. Findings We find that more efficient firms hire more services from an outsourcing provider and that the munificence of the client firm’s industry positively moderates this relationship. Our results suggest that efficient clients can better keep transaction costs under control when accessing, assimilating, and exploiting the knowledge embedded in an expanded set of services provided by an outsourcing supplier. Originality/value This study extends the absorptive capacity perspective by showing that a client’s efficiency reinforces its opportunities to absorb knowledge-intensive services from a supplier when expanding the range of operations in the context of BPO. 2024-03-14T11:56:54Z 2024-03-14T11:56:54Z 2021-04-09 info:eu-repo/semantics/article Ellimäki, P., Aragón-Correa, J.A. and Hurtado-Torres, N.E. (2021), "Efficiency and the scope of outsourced services: a client firm’s absorptive capacity perspective of knowledge-intensive services", Management Decision, Vol. 59 No. 12, pp. 2848-2863. https://doi.org/10.1108/MD-09-2020-1192 https://hdl.handle.net/10481/89978 10.1108/MD-09-2020-1192 eng http://creativecommons.org/licenses/by-nc-nd/4.0/ info:eu-repo/semantics/openAccess Attribution-NonCommercial-NoDerivatives 4.0 Internacional Emerald