LAUSR

PurposeOutsourcing is a common practice that is often adopted to reduce costs and enhance capabilities. The underlying logic of a firm's outsourcing strategy is not always evident due to multiple antecedents with interacting effects. This study identifies critical factors that influence outsourcing strategies and reveals their interactions with empirical evidence from Chinese construction firms.Design/methodology/approachThe quantitative decision-making trial and evaluation laboratory (DEMATEL) method was applied to analyze the interrelationships among the antecedents of project outsourcing strategies. First, 24 experts from 13 Chinese construction firms were invited to evaluate and score the influence of each factor on the other. Second, the graph theory and matrix tools of DEMATEL were used to quantitatively obtain the causality among factors and the prominence of each factor within the system.FindingsAmong the antecedents, a firm's pursuit of cost efficiency, identity, technological capability and contracting capability are the most prominent factors influencing project outsourcing strategies. For the interactions among these factors, this study reveals that the focal firm's technological capability significantly influences its contracting capability, and they jointly influence the firm's outsourcing practices, the selection of outsourcing vendors and, eventually, its pursuit of cost efficiency. Moreover, legal restrictions in the institutional environment strongly shape this capability–cost efficiency relationship.Originality/valueTwelve critical factors following different theoretical perspectives at varying levels of analysis were identified from the literature review. By revealing the interrelationships among these factors, this study develops a holistic framework that integrates the transaction cost and capability perspectives for understanding project outsourcing strategies embedded in different institutional environments.