IDEAS home Printed from https://ideas.repec.org/a/inm/orinte/v18y1988i3p62-73.html
   My bibliography  Save this article

Strategic Sourcing, Vertical Integration, and Transaction Costs

Author

Listed:
  • Gordon Walker

    (Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104)

Abstract

In managing strategic risk in sourcing relationships, an organization is assumed to order inputs and operations in terms of their value to accomplishing the firm's product market performance goals. Supplier relationships involving higher value inputs and operations have higher levels of strategic risk, since failure by the supplier leads to greater decline in the performance of the firm. Three types of risk are appropriation, technology diffusion, and end product degradation, which occur under different conditions. Vertical integration (or deintegration) may be undertaken as the level of strategic risk varies and the firm is more or less qualified to perform the operation relative to the best outside supplier.

Suggested Citation

  • Gordon Walker, 1988. "Strategic Sourcing, Vertical Integration, and Transaction Costs," Interfaces, INFORMS, vol. 18(3), pages 62-73, June.
  • Handle: RePEc:inm:orinte:v:18:y:1988:i:3:p:62-73
    DOI: 10.1287/inte.18.3.62
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/inte.18.3.62
    Download Restriction: no

    File URL: https://libkey.io/10.1287/inte.18.3.62?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mandal, Prasenjit & Jain, Tarun, 2021. "Partial outsourcing from a rival: Quality decision under product differentiation and information asymmetry," European Journal of Operational Research, Elsevier, vol. 292(3), pages 886-908.
    2. Colbert, Gary J. & Spicer, Barry H., 1995. "A multi-case investigation of a theory of the transfer pricing process," Accounting, Organizations and Society, Elsevier, vol. 20(6), pages 423-456, August.
    3. Sean M. Handley & Corey M. Angst, 2015. "The impact of culture on the relationship between governance and opportunism in outsourcing relationships," Strategic Management Journal, Wiley Blackwell, vol. 36(9), pages 1412-1434, September.
    4. Lim, Wei Shi & Tan, Soo Jiuan, 2010. "Outsourcing suppliers as downstream competitors: Biting the hand that feeds," European Journal of Operational Research, Elsevier, vol. 203(2), pages 360-369, June.

    More about this item

    Keywords

    planning: corporate; risk analysis;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:orinte:v:18:y:1988:i:3:p:62-73. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.