Capabilities as shift parameters for the outsourcing decision
Jain, Amit; Thiétart, Raymond-Alain (2014), Capabilities as shift parameters for the outsourcing decision, Strategic Management Journal, 35, 12, p. 1881-1890. http://dx.doi.org/10.1002/smj.2193
TypeArticle accepté pour publication ou publié
Journal nameStrategic Management Journal
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Abstract (EN)In this paper, we argue that capabilities serve as shift parameters that result in a change in the critical value of asset specificity at which firms switch from in-sourcing to outsourcing. Capabilities have two effects: they result in a change in firm production costs and in firm governance costs relative to the market. As a result, the frontier at which market governance gives way to firm governance shifts. Three factors that produce such shifts are the value, rarity, and inimitability of capabilities employed in firm processes. Considered as shift parameters, the effect of capabilities integrates seamlessly into transaction costs reasoning and is not a competing view of firm governance. We demonstrate these arguments empirically using a sample of 180 information systems sourcing decisions.
Subjects / KeywordsCapabilities; Transaction costs; Shift parameters; Make or buy; Outsourcing
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