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Make-Or-Buy Decisions On Technology-Intensive Products: Insights From The Consumer Goods Industry

Author

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  • ALEXANDER BREM

    (Friedrich-Alexander-Universität Erlangen-Nürnberg (FAU), Chair of Technology Management, Fürther Str. 246c, 90429 Nuremberg, Germany2University of Southern Denmark (SDU), Mads Clausen Institute, Alsion 2, 6400 Sønderborg, Denmark)

  • ROBERT ELSNER

    (Friedrich-Alexander-Universität Erlangen-Nürnberg (FAU), Chair of Technology Management, Fürther Str. 246c, 90429 Nuremberg, Germany)

Abstract

Make-or-buy decisions on technology-intensive components represent a key task in the management of technologies. Against this background, this paper presents an analysis of a technology company which gave key insights into their make-or-buy decisions on the strategic and operative level. The results show two kinds of make-or-buy decisions, called type 1 and type 2. In contrast to type 1 make-or-buy decisions whose scope is mostly limited to the production and quality function, type 2 decisions are strongly linked to engineering and R&D activities. Moreover, two new decision matrices are introduced: a ‘product/subsystem aggregation’ scheme and a ‘make-or-buy controlling’ matrix. In an environment in which companies move towards greater use of outsourcing, the framework ensures that company strategy and core competencies are followed in the long run despite short-range deviations of make-or-buy analysis results. These findings might be helpful and suitable to other manufacturing companies that deal with technology-intensive components on a strategic and operative level.

Suggested Citation

  • Alexander Brem & Robert Elsner, 2018. "Make-Or-Buy Decisions On Technology-Intensive Products: Insights From The Consumer Goods Industry," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 22(06), pages 1-17, August.
    • Handle: RePEc:wsi:ijimxx:v:22:y:2018:i:06:n:s1363919618500469
    DOI: 10.1142/S1363919618500469
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    References listed on IDEAS

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    2. Steven Tadelis & Oliver E.Williamson, 2012. "Transaction Cost Economics [The Handbook of Organizational Economics]," Introductory Chapters,, Princeton University Press.
    3. Oliver E. Williamson, 2025. "Transaction Cost Economics," Springer Books, in: Claude Ménard & Mary M. Shirley (ed.), Handbook of New Institutional Economics, edition 0, chapter 4, pages 47-71, Springer.
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    7. Alexander Brem & Daniel A. Gerhard & Kai-Ingo Voigt, 2014. "Strategic Technological Sourcing Decisions in the Context of Timing and Market Strategies: An Empirical Analysis," International Journal of Innovation and Technology Management (IJITM), World Scientific Publishing Co. Pte. Ltd., vol. 11(03), pages 1-23.
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