Abstract:
The study investigates the effect of outsourcing on competitive advantage: the mediating role of innovation. 300 businesses that engage in outsourcing in Ghana were selected out of which 231 representing 77% response rate participated. Confirmatory Factor Analysis was done to confirm appropriate variables using Structural Equation Modeling. Data was collected using questionnaires. Purposive and convenient sampling techniques were adopted in selecting respondents. The study found that, transaction cost view of outsourcing inversely relates to competitive advantage. The study also found competence based view and relational view to have impacted positively on competitive advantage. Innovation plays a full mediation between competence based views as well as relational and competitive advantage. There is no mediation between transaction cost view and competitive advantage through innovation. The study recommends the use of prudent outsourcing practices and innovation as a means of gaining competitive advantage
