Outsourcing suppliers as downstream competitors: Biting the hand that feeds |
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Authors: | Wei Shi Lim Soo Jiuan Tan |
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Institution: | NUS Business School, National University of Singapore, BIZ 1 Building #04-19, 1 Business Link, Singapore 117592, Singapore |
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Abstract: | In this paper, we highlight an aspect of supplier opportunism in the outsourcing paradox that has largely been ignored by extant research – the supplier as a direct competitor of the buyer firm. In light of this paradox, we offer a game-theoretic framework in which we identify conditions under which firms could alleviate or mitigate this outsourcing problem. Our results show that apart from transaction costs, firm-level capabilities (both ordinary and dynamic) play important roles in determining the make only, buy only, or make-and-buy options a firm could exercise in countering the threat of the supplier as a potential competitor in the downstream marketplace. |
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Keywords: | Outsourcing Supply chain management Supplier opportunism Game theory |
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