A Bargaining perspective on strategic outsourcing and supply competition
By: FONTENAY, Catherine C. de
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Contributor(s): GANS, Joshua S.
Material type: 
ArticlePublisher: Chichester, UK : John Wiley, August 2008Strategic Management Journal 29, 8, p. 818-839Abstract: This article considers the outsourcing choice of a downstream firm with its own upstream production resources or assets. The novelty of the approach is to consider the outsourced function as involving resources consistent with the resource-based view of the firm. From a bargaining perspective, we characterize a downstream firm's decision whether to outsource to an independent or to an established upstream firm. In so doing, the downstream firm faces a trade-off between lower input costs afforded by independent competition, and higher resource value associated with those who can consolidate upstream capabilities. We show that this trade-off is resolved in favor of outsourcing to an established firm
This article considers the outsourcing choice of a downstream firm with its own upstream production resources or assets. The novelty of the approach is to consider the outsourced function as involving resources consistent with the resource-based view of the firm. From a bargaining perspective, we characterize a downstream firm's decision whether to outsource to an independent or to an established upstream firm. In so doing, the downstream firm faces a trade-off between lower input costs afforded by independent competition, and higher resource value associated with those who can consolidate upstream capabilities. We show that this trade-off is resolved in favor of outsourcing to an established firm
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