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A Bargaining Perspective on Strategic Outsourcing and Supply Competition
Strategic Management Journal (2008)
  • Catherine C de Fontenay
  • Joshua S Gans

This paper 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 characterise a downstream firm's decision as to whether to outsource to an independent or established upstream frim. In so doing, that firm faces a trade-off between lower input costs afforded by independent competition and higher resource value associated to those who can consolidate upstream capabilities. We show that this trade-off is resolved in favour of outsourcing to an established firm.

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Citation Information
Catherine C de Fontenay and Joshua S Gans. "A Bargaining Perspective on Strategic Outsourcing and Supply Competition" Strategic Management Journal Vol. 29 Iss. 8 (2008)
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