How much to make and How much to buy? An Analysis of Optimal Plural Sourcing Strategies
نویسندگان
چکیده
While many theories of the firm seek to explain when firms make rather than buy, in practice firms often make and buy the same inputthey engage in plural sourcing. We argue that explaining the mix of external procurement and internal sourcing for the same input requires a consideration of complementarities across and constraints within modes of procurement. We create analytical foundations for making empirical predictions about when plural sourcing is likely to be optimal and why the optimal mix of internal and external sourcing may vary across situations. Our framework also proves useful for assessing the possible estimation biases in transaction level make-or-buy studies arising from ignoring complementarities and constraints.
منابع مشابه
U.s. Electric Utility Industry
1 Recent work has shown that a firm’s plural sourcing strategy, which determines how much it chooses to make versus how much it chooses to buy, requires consideration of the complementarities and constraints that affect the differential advantages of making and buying. Elaborating on this perspective, we theorize how (mis)fit between a firm’s plural sourcing strategy of simultaneously making an...
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