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Organization of the News Industry - The Case of 'Making-or-Buying' Articles

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In this paper the two canonical theories of the firm - transaction costs economics and theknowledge-based view of the firm – predictions on ‘make-or-buy’ are tested on the newsindustry. The news industry provides an interesting case on which to test the two theories sinceit is characterized by a high degree of urgency. Urgency refers to the need to catch and processinputs fast. A tendency that is becoming more widespread in other industries where theproduction cycle tends to be reduced. The test is don on original data on the newspaper industrycollected by the author. The conclusions drawn are that that newspapers are organized differentlythan is predicted from the knowledge-based view of the firm and transaction cost economics.The newspapers do no specialize in core competencies measured in terms of topics covered. Onthe contrary, a precondition for outsourcing is well-developed competencies in house. Thewidespread use of integration cannot either be explained as a solution to hold up either, such astransaction cost economics predicts. The reason behind has to be sought in urgency.

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Jan Vang

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