Do make or buy decisions matter? The influence of organizational governance on technological performance
Article first published online: 2 JUL 2002
Copyright © 2002 John Wiley & Sons, Ltd.
Strategic Management Journal
Volume 23, Issue 9, pages 817–833, September 2002
How to Cite
Leiblein, M. J., Reuer, J. J. and Dalsace, F. (2002), Do make or buy decisions matter? The influence of organizational governance on technological performance. Strat. Mgmt. J., 23: 817–833. doi: 10.1002/smj.259
- Issue published online: 30 JUL 2002
- Article first published online: 2 JUL 2002
- Manuscript Accepted: 28 MAR 2002
- Manuscript Received: 8 DEC 2000
- vertical integration;
This paper investigates how firms' decisions to outsource or internalize production affect their technological performance. While several popular arguments and some anecdotal evidence suggest a direct association between outsourcing and technological performance, the effects of firms' governance decisions are likely to be contingent upon several specific attributes underlying a given exchange. This paper first demonstrates how standard performance models can improperly suggest a positive relationship between firms' outsourcing decisions and their technological performance. Models that account for firm- and transaction-specific features are then presented, which indicate that neither outsourcing nor internalization per se result in superior performance; rather, a firm's technological performance is contingent upon the alignment between firms' governance decisions and the degree of contractual hazards. Copyright © 2002 John Wiley & Sons, Ltd.