Testing predictions on supplier governance from the global value chains literature

Johannes Van Biesebroeck and Alexander Schmitt

No 14549, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: A vast empirical literature analyzes the determinants of the make-or-buy decision, but firms also need to decide how to organize their supplier relationships when they choose to buy. The global value chains framework provides predictions on the nature of buyer-supplier collaboration. We use a unique transaction-level dataset of outsourced automotive components to study carmakers’ choice between four distinct types of supplier governance: market, captive, relational, or modular. The theory formulates predictions based on three characteristics: the complexity or contractibility of a transaction, the capabilities of suppliers, and how objectively codifiable performance requirements are. The results illustrate that sourcing relationships differ systematically and that proxies for the three characteristics have effects in line with the theory.

Keywords: Outsourcing; Gvc; Theory of the firm; Prt; Tce (search for similar items in EconPapers)
JEL-codes: L22 L23 M11 (search for similar items in EconPapers)
Date: 2020-04
New Economics Papers: this item is included in nep-int and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Testing predictions on supplier governance from the global value chains literature (2022)
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