Evidence on the Role of Firm Capabilities in Vertical Integration Decisions

Argyres, Nicholas

doi:10.1002/(sici)1097-0266(199602)17:2<129::aid-smj798>3.0.co;2-h

Cited by 360 publications

(53 citation statements)

References 11 publications

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“…From a capabilities perspective, one important suggestion is that the boundaries of the firm are partly determined by the differential between the capabilities they hold in relation to potential supplies and the relative costs of developing capabilities internally against accessing them via non‐hierarchical means (Argyres, 1996; Barney, 1999; Langlois and Robertson, 1995). Opportunism and threats of hold‐up become part of the calculus of deciding which is the most cost‐effective way to access capabilities (Barney, 1999).…”

Section: Indirect Capabilities and Firm Boundariesmentioning

confidence: 99%

The Multiple Boundaries of the Firm*

Araújo

Dubois

Gadde

2003

J Management Studies

179

162

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 The notion of firm boundaries has received considerable attention in theories of the firm that address the problems of investment incentives and mitigation of hold-up problems. In this paper we attempt to develop a different approach to the problem of vertical firm boundaries, based on recent advances in the capabilities view of the firm. Our arguments rely on the pioneering insights of Penrose, Richardson and Loasby to elaborate a view of the boundaries determined by the interaction of the firm's direct and indirect capabilities with other actors. We develop the notion of indirect capabilities to highlight how firm boundaries respond to the distribution of capabilities in the economy as well as the modes of access to complementary and external capabilities. We conclude that the evolution of firm boundaries must be understood in the context of decisions on how the firm relates to other actors in its environment.

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Section: Indirect Capabilities and Firm Boundariesmentioning

confidence: 99%

The Multiple Boundaries of the Firm*

Araújo

Dubois

Gadde

2003

J Management Studies

179

162

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“…In recent years, Zajac et al (2000) and Kraatz and Zajac (2001) extended the static strategy-structure framework and developed a model of dynamic strategic fit based on a contingency logic. By applying Chandler's ''structure follows strategy'' framework in combination with the resourcebased and organizational capability view (Wernerfelt, 1984;Argyres, 1996;Teece et al, 1997;Argote & Darr, 2000;Winter & Szulanski, 2001;Zollo & Winter, 2002;Helfat & Peteraf, 2003), we argue that, under given market structure, resources and capabilities determine the firm's strategy (see Figure 2). By applying Chandler's ''structure follows strategy'' framework in combination with the resourcebased and organizational capability view (Wernerfelt, 1984;Argyres, 1996;Teece et al, 1997;Argote & Darr, 2000;Winter & Szulanski, 2001;Zollo & Winter, 2002;Helfat & Peteraf, 2003), we argue that, under given market structure, resources and capabilities determine the firm's strategy (see Figure 2).…”

Section: Strategy Contractibility and Dynamics Of Decision Rights Imentioning

confidence: 99%

Contractibility, Strategy, and Network Dynamics: From Franchising to Licensing

Leitmannslehner

Windsperger

2012

Journal of Marketing Channels

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The article examines the network dynamics from franchising to licensing due to the increase of contractibility of the franchiser's system-specific assets as determinant of the allocation of decision rights between the network partners. Based on the property rights approach, residual decision rights must be allocated according to the distribution of intangible knowledge assets between the franchiser and franchisee. Our analysis derives the following hypothesis: The more contractible the franchiser's system-specific assets, the higher is the tendency from franchising toward licensing. In addition, we investigate the impact of strategy change on the standardization (contractibility) of system-specific assets and the network governance. We argue that a change of strategy may increase the contractibility of system-specific know-how and consequently the tendency toward licensing. This study presents empirical evidence from company Getifix on the network dynamics from franchising to licensing.

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“…In order to compare the two sets of explanations for boundary decisions, Argyres (1996) analyses qualitative data on make-or-buy decisions made by a large firm. By simultaneously considering possible roles of transaction cost variables and those associated with firm capabilities he found support for the proposition that firms outsource when suppliers possess superior capabilities, except when higher costs are accepted in the short-run while capabilities are being developed in-house.…”

Section: Ijopm 292mentioning

confidence: 99%

Productivity effects of outsourcing

Broedner

Kinkel

Lay

2009

International Journal of Operations &Amp; Production Management

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If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. AbstractPurpose -The purpose of this paper is to present an empirical investigation of firm level productivity effects of outsourcing against the background of a review of recent theoretical considerations about the topic. Design/methodology/approach -The empirical research is based on a large representative data set from the German manufacturing industries containing detailed data about almost 500 establishments. It investigates productivity effects of outsourcing under control of other relevant factors influencing firm level productivity by means of a multivariate regression analysis. Findings -In sharp contrast to common belief and prevailing management practices, outsourcing, i.e. the extent to which the vertical range of manufacturing is reduced, has a strong negative impact on a firm's labour productivity. Against the background of the theoretical considerations reviewed from the literature, this result can be explained such that mere cost-efficiency comparisons are insufficient for appropriate decisions on vertical manufacturing range as the effects of opportunism, of disturbed competence formation, and of limited innovative value creation processes may be overcompensating cost benefits.Research limitations/implications -The investigation focuses on productivity effects of outsourcing as a relevant long-term performance measure not regarding other firm level performance indicators. Although covering a significant range of industrial sectors in Germany, more empirical evidence is needed from other sectors and regions. Moreover, performance effects of different types of outsourcing implementations (e.g. simple part supply versus outsourcing of whole business processes including design, production, and marketing) should be investigated as they might have different impacts. Practical implications -The findings strongly recommend a revision of established decision-making schemes for vertical manufacturing range based on cost-efficiency considerations. Decision making should instead integrate cost efficiency and transaction cost analysis with the competence and innovation capability formation perspectives. Procedural schemes for this integrated view are still to be developed, however....

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Evidence on the Role of Firm Capabilities in Vertical Integration Decisions

Cited by 360 publications

References 11 publications

The Multiple Boundaries of the Firm*

The Multiple Boundaries of the Firm*

Contractibility, Strategy, and Network Dynamics: From Franchising to Licensing

Productivity effects of outsourcing

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