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Cannot make do without you: Outsourcing by knowledge-intensive new firms in supplier networks

Bhalla, A. and Terjesen, S. (2013). Cannot make do without you: Outsourcing by knowledge-intensive new firms in supplier networks. Industrial Marketing Management, 42(2), pp. 166-179. doi: 10.1016/j.indmarman.2012.12.005

Abstract

How do new firms operating in dynamic environments organize their operations? Building on the transaction cost theory and the resource based view and using case study data from ten biotechnology start-ups and twenty of their suppliers, this research reveals that new firms outsourcing to highly-embedded suppliers are likely to secure access to a wider supplier network, attain best-in-class operational knowledge, and avoid supplier opportunism while facing low levels of relationship-specific investments. New firms outsourcing to suppliers at the network periphery are more likely to realize cost efficiencies, expose themselves to opportunism, uncertainty, and higher levels of relationship-specific investments but low levels of operational knowledge. We propose that new firms build five outsourcing competencies to realize benefits.

Publication Type: Article
Additional Information: NOTICE: this is the author’s version of a work that was accepted for publication in Industrial Marketing Management. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Industrial Marketing Management, Volume 42, Issue 2, February 2013, Pages 166–179, http://dx.doi.org/10.1016/j.indmarman.2012.12.005.
Publisher Keywords: Case studies, New firms, Outsourcing capability, Supplier networks
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Departments: Cass Business School > Management
URI: http://openaccess.city.ac.uk/id/eprint/5973
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