How Much You Know versus How Well I Know You: Selecting a Supplier for a Technically Innovative Component

Glenn Hoetker

Working Papers from University of Illinois at Urbana-Champaign, College of Business

Abstract: I use transaction costs economics to model an assembler's choice of supplier for an innovative component. I extend the TCE model by drawing on the insights of the evolutionary view of strategy, which suggests a focus on the technical capabilities of potential suppliers, and the literature on interfirm relationships. Using information on the procurement of displays by notebook computer manufacturers, I find that assemblers always prefer a more technically capable supplier. As uncertainty increases, assemblers value prior transactions with a supplier. At higher levels of uncertainty, prior transactions become irrelevant and assemblers prefer internal suppliers. The model presented in this paper advances the theoretical frontiers of TCE, while expanding the range of managerial issues to which it can be applied.

Date: 2002
References: Add references at CitEc
Citations: View citations in EconPapers (38)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecl:illbus:02-0106

Access Statistics for this paper

More papers in Working Papers from University of Illinois at Urbana-Champaign, College of Business Contact information at EDIRC.
Bibliographic data for series maintained by ().