Trust Problems in Household Outsourcing

Abstract

This article addresses the issue of domestic outsourcing. We view outsourcing decisions as the result of utility-maximizing behavior on the part of households. Earlier studies have shown that households with more time constraints, the most common reason for outsourcing, do not always outsource more. To account for these unexpected empirical findings, we provide a new explanation for outsourcing decisions that focuses on trust problems associated with outsourcing household and caring tasks. Trust problems are related to the competence, values, and possibilities as well as incentives for opportunism on the part of the supplier of the product or service. Using insights from the transaction cost approach, new hypotheses are formulated on the influence of the problem potential on the make-or-buy decision (whether or not to outsource a task). The embeddedness of the supplier is introduced as a way to generate trust, thus decreasing the problem potential.