Hotel outsourcing under asset specificity: “The good, the bad and the ugly”

• Three case studies investigating the performance of Tunisian hotel outsourcing.
• We apply TCE to examine hotel outsourcing relationships under asset specificity.
• Working within post-positivism, we find evidence of falsification value.
• Insights have important implications for the management of hotel outsourcing.

This paper presents three case studies developed to investigate outsourcing outcomes in the Tunisian hotel industry. The paper applies a transaction cost economics (TCE) logic to examine potential contracting problems stemming from hotel outsourcing under asset specificity conditions. Working within the tradition of post-positivism, we find case study evidence of significant falsification value regarding TCE propositions on the performance consequences of unilateral and bilateral relation-specific investments and their holdup potential. Our insights have important practical implications for the management of hotel outsourcing relationships characterized by high asset specificity.