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Do make or buy decision matter? The influence of organizational governance on technological performance

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This paper investigates how firms' decisions to outsource or internalise production affect their technological performance. While several popular arguments and some anecdotal evidence suggest a direct association between integration 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 internalisation 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.

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en

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application/pdf

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http://flora.insead.edu/fichiersti_wp/inseadwp2001/2001-51.pdf

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Copyright INSEAD. All rights reserved