Offshore or Not? An Transaction Cost Economics Analysis
نویسندگان
چکیده
Transaction Cost Economics (TCE) theory is widely used to explain the appropriate governance structure for make-or-buy decisions. We adopt this theory to analyze firms’ decisions and choices about offshore outsourcing, domestic outsourcing and internal procurement. The main findings of this paper are as follows: When asset specificity is low, offshore outsourcing is preferable. As asset specificity increases, firms start favoring domestic outsourcing. When asset specificity becomes very high, firms would rather produce it internally.
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