Strategic outsourcing

Shy, Oz; Stenbacka, Rune

doi:10.1016/s0167-2681(02)00048-3

Cited by 153 publications

(107 citation statements)

References 15 publications

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“…4 By investing a fixed fee K ≥ 0, firm 1 can acquire the same technology as firm 0 in converting good I into good F . Assume one unit of good I 2 See, e.g., Spiegel (1993), Chen (2001), Shy and Stenbacka (2003), Chen et al (2004), Shy and Stenbacka (2005), Van Long (2005), Buehler and Haucap (2006), Arya et al (2008a,b).…”

Section: The Model and Main Resultsmentioning

confidence: 99%

Strategic sourcing for entry deterrence and tacit collusion

Chen

2010

J. Econ.

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By sourcing key intermediate goods to a potential entrant, incumbent firm can credibly and observably commit to an intense post-entry competition, thereby deter the entrant's entry. At the same time, a tacit collusion exists, and the entrant's loss from staying out of the final-good market is compensated through their sourcing transaction. We find that, there exist scenarios where entry-deterring sourcing enhances not only social welfare but also consumers' welfare, although in general it has ambiguous effect on social welfare.

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Section: The Model and Main Resultsmentioning

confidence: 99%

Strategic sourcing for entry deterrence and tacit collusion

Chen

2010

J. Econ.

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“…Within a Cournot setting, Nickerson and Vanden Bergh (1999) show that organisational choices are affected by strategic considerations in the firm-customer transactions. Shy and Stenbacka (2003) show that competition in the upstream industry affects production efficiency and the choice in the mode of operation of a downstream of buyer-supplier relationships "there are almost no statistically significant results that contradict TC predictions" (p. 658).…”

Section: ) "A Theory Of the Firm Must Define 'Integration' (Ie Whmentioning

confidence: 95%

Economising, Strategising and the Decision to Outsource

Leahy

Montagna

2011

SSRN Journal

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Abstract:We study the make-or-buy decision of oligopolistic firms in an industry in which final good production requires specialised inputs. Firms' mode of operation decision depends on both the incentive to economize on costs and on strategic considerations. We explore the strategic incentives to outsource and show that asymmetric equilibria emerge, with firms choosing different modes of operation, even when they are ex-ante identical. With ex-ante asymmetries, higher cost firms are more likely to outsource. We apply our model to a number of different international trading setups.(86 words)JEL classification: F12, L13, L14.

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“…Competition effectively represents the seriousness of challenges facing the firm when it seeks to market its products. There has been a range of studies by economists examining the relationship between competition and outsourcing (Cachon and Harker 2002;Grossman and Helpman 2002;Shy and Stenbacka 2003). Broadly what these studies argue is that where competition is more intense, firms tend to outsource more; competition forces firms to constantly search for cost efficiencies, which may be obtained through outsourcing.…”

Section: Market Competitionmentioning

confidence: 99%

Outsourcing and its implications for market success: negative curvilinearity, firm resources, and competition

Kotabe

Mol

Murray

et al. 2011

J. of the Acad. Mark. Sci.

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Over the past few decades, outsourcing has become a widely discussed and researched means for firms to change their performance. In this article, we attempt to link outsourcing to the market success of firms, specifically their market share. We argue that although firms may be able to increase their market share through outsourcing, this is only true up to a point, beyond which market share actually decreases as a consequence of further outsourcing. There is, in other words, a negatively curvilinear (inverted U) relationship between outsourcing and market share. We also hypothesize that the outsourcing-market share relationship is moderated negatively by both the strength of firm resources and the extent of competition in a firm's market. We empirically confirm these arguments through a panel data analysis containing over 19,000 observations on manufacturing firms, and offer some case examples to illustrate the mechanisms driving these results. We discuss implications for marketing research and practice.

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Strategic outsourcing

Cited by 153 publications

References 15 publications

Strategic sourcing for entry deterrence and tacit collusion

Strategic sourcing for entry deterrence and tacit collusion

Economising, Strategising and the Decision to Outsource

Outsourcing and its implications for market success: negative curvilinearity, firm resources, and competition

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