The file Contract.xls (obtain the data from http://www.sagepub.in/books/

Book242499/samples) contains data on the degree to which an outsourcing arrangement was successful and how the company scored on a rating questionnaire prior to establishing the relationship. Use factor analysis to construct some latent variables and develop a model to allow the success rating to be estimated from the questionnaire scores.

The questionnaire was: Rate the potential outsourcer on the scales shown in Table 13.24.

Table 13.24 Criteria for Selecting Outsource Partner Criteria Very Weak Very Strong 1 2 3 4 5 Technical capability Ability to manage projects Collaborator’s track record Strength of communication links Compatibility of operating cultures Compatibility of strategic aims Collaborator’s development speed Collaborators development costs Business strength of collaborator Financial resources of collaborator Security Strategic position Source: Authors’ own.
Note: This data was collected by William Bailiey as part of his PhD (1997).