Strategic Sourcing Theory and Evidence from Economics and Business Management
by Pint, Ellen M.; Baldwin, Laura H.Format: Paperback
Pub. Date: 1997-12-02
Publisher(s): RAND Corporation
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Summary
This report discusses the recommendations of the economics and business management literature on issues related to outsourcing.
Table of Contents
| Preface | p. iii |
| Summary | p. vii |
| Acknowledgments | p. xi |
| Abbreviations and Acronyms | p. xiii |
| Introduction | p. 1 |
| Strategic Sourcing: Theory and Evidence from Economics and Business Management | p. 1 |
| Outline | p. 2 |
| Transaction Cost Economics | p. 3 |
| Transactions Can Be Internal or External to an Organization | p. 3 |
| The Air Force Has Many Options for Organizing Transactions | p. 4 |
| Characteristics of Transactions Can Affect Transaction Costs | p. 6 |
| Each Governance Structure Has Strengths and Weaknesses | p. 8 |
| Efficient Governance Structure Depends on Characteristics of Transaction | p. 10 |
| Empirical Evidence on Transaction Cost Theory | p. 12 |
| Outline | p. 12 |
| Empirical Evidence Is Consistent with the Predictions of TCE | p. 13 |
| Asset Specificity Makes Outsourcing More Difficult | p. 15 |
| Contracts Can Be Tailored to Fit the Characteristics of Transactions | p. 17 |
| Timing and Reputation Can Influence Outsourcing Decisions | p. 20 |
| The Business Management Literature | p. 22 |
| Outline | p. 22 |
| Identify the Organization's Core Competencies | p. 23 |
| Reducing Costs Should Not Be the Only Objective of Outsourcing | p. 25 |
| Forming Strategic Alliances with Suppliers Can Enhance the Benefits of Outsourcing | p. 27 |
| Strategic Alliances May Not Be Appropriate in Some Circumstances | p. 30 |
| Source Selection Should Fit Strategic Needs | p. 33 |
| Good Management Can Increase the Likelihood of Successful Long-Term Relationships | p. 36 |
| Full Costs and Benefits of Outsourcing Are Difficult to Measure | p. 39 |
| Evidence from the Business Management Literature | p. 41 |
| Outline | p. 41 |
| Business Case Studies Tend to Confirm Economic and Business Management Theories | p. 42 |
| Vertical Integration Is Used to Retain Core Competencies and Lower Transaction Costs | p. 44 |
| More Uncertainty or Bargaining Power Implies Less Vertical Integration | p. 46 |
| Structure and Autonomy of Strategic Alliances Should Be Tailored to Economic Environment | p. 49 |
| Buyer/Supplier Relationships Can be "Exit" or "Voice" | p. 52 |
| Air Force Currently Uses Exit Strategy with Support Services Contractors | p. 54 |
| Voice Relationships Promote Investment and Improved Performance | p. 57 |
| Converting to Voice Relationships Requires Long-Term Commitments to Suppliers | p. 62 |
| Source Selection Should Focus on Long-Term Relationships with High-Quality Suppliers | p. 65 |
| Gain-Sharing Motivates Suppliers to Invest in Process Improvement | p. 69 |
| Implications for the Air Force | p. 72 |
| Outline | p. 72 |
| Core Competences and Asset Specificity Influence Sourcing Decisions | p. 73 |
| Good Source Selection and Contract Design Can Improve Performance | p. 75 |
| Treat Suppliers of Complex Services as Partners, Not Arm's-Length Vendors | p. 77 |
| Bibliography | p. 81 |
| Table of Contents provided by Syndetics. All Rights Reserved. |
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