Outsourcing suppliers as downstream competitors: Biting the hand that feeds

Wei Shi Lim and Soo Jiuan Tan

European Journal of Operational Research, 2010, vol. 203, issue 2, 360-369

Abstract: In this paper, we highlight an aspect of supplier opportunism in the outsourcing paradox that has largely been ignored by extant research - the supplier as a direct competitor of the buyer firm. In light of this paradox, we offer a game-theoretic framework in which we identify conditions under which firms could alleviate or mitigate this outsourcing problem. Our results show that apart from transaction costs, firm-level capabilities (both ordinary and dynamic) play important roles in determining the make only, buy only, or make-and-buy options a firm could exercise in countering the threat of the supplier as a potential competitor in the downstream marketplace.

Keywords: Outsourcing; Supply; chain; management; Supplier; opportunism; Game; theory (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (29)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:203:y:2010:i:2:p:360-369

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