Governance Dynamics of Existing Activities

Xavier Castañer () and A. Cuerzo-Cazurra
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Xavier Castañer: GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique

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Abstract: In this paper, we analyze the dynamics of the governance of an existing activity. Drawing on the behavioral theory of the firm, we argue that before deciding to outsource an existing activity, firms attempt to achieve the desired level of performance by a sequence of improvement effort actions. We claim that this improvement effort process consists on sequentially: (1) investing internally, (2) imitating best practices, (3) obtaining external competences, and (4) outsourcing only if previous actions have not improved the activity performance to a satisfactory level. This sequential approach is driven by the firm economizing on improvement and change cost while learning and maintaining control of the underlying competences. Key words: activity, governance, make or buy, costs, learning, outsourcing, improvement, behavioral theory of the firm.

Keywords: Governance Dynamics; Dynamics; Existing Activities (search for similar items in EconPapers)
Date: 2006
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Published in 2006

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00125677

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