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Make-buy decisions in the face of technological change: does industry clockspeed matter?

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  • Robert K. Perrons
  • Ken Platts

Abstract

Some evidence in the area of make-buy decisions for new technologies suggests that it is a good idea for a company to pursue a fairly rigorous "make" policy in the early days of a potentially disruptive innovation. Other studies prescribe exactly the opposite, promoting instead a "buy" strategy. This paper seeks to bridge the gap between these perspectives by suggesting that both strategies are valid, but that they are most successfully applied in different market environments. The "make" prescription may be more suited to either extremely fast or extremely slow rates of technological change, while a "buy" strategy might be more appropriate in market sectors where technologies evolve at a medium pace. This paper highlights the importance of industry clockspeed and supplier relationships in make-buy decisions for new technologies, and puts forward two new hypotheses that require empirical testing.

Suggested Citation

  • Robert K. Perrons & Ken Platts, 2005. "Make-buy decisions in the face of technological change: does industry clockspeed matter?," International Journal of Management and Enterprise Development, Inderscience Enterprises Ltd, vol. 2(1), pages 1-11.
    • Handle: RePEc:ids:ijmede:v:2:y:2005:i:1:p:1-11
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    Cited by:

    1. Kashif Ahmed & Ralf Bebenroth & Jean-Francois Hennart, 2020. "Formal Institutional Uncertainty and Equity Sought on Foreign Market Entry: Does Industry Matter?," Discussion Paper Series DP2020-03, Research Institute for Economics & Business Administration, Kobe University.

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