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Supplier switching and outsourcing

Author

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  • Yukako Ono
  • Victor Stango

Abstract

We examine supplier switching decisions using a unique database that tracks firms (credit unions) and their suppliers (data processing vendors); the data are in a panel, allowing us to track supplier switching decisions at a new level of detail. We focus on two sets of relationships. First, we estimate a model that relates supplier choices and switching to a variety of buyer- and supplier-specific characteristics. Second, we examine how> switching depends on the vendor relationships that credit unions choose: one is a partial form of outsourcing while the other is more complete. This allows us to estimate how supplier switching interacts with organizational form.

Suggested Citation

  • Yukako Ono & Victor Stango, 2005. "Supplier switching and outsourcing," Working Paper Series WP-05-22, Federal Reserve Bank of Chicago.
    • Handle: RePEc:fip:fedhwp:wp-05-22
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    References listed on IDEAS

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    1. Keane, Michael P, 1997. "Modeling Heterogeneity and State Dependence in Consumer Choice Behavior," Journal of Business & Economic Statistics, American Statistical Association, vol. 15(3), pages 310-327, July.
    2. Farrell, Joseph & Klemperer, Paul, 2007. "Coordination and Lock-In: Competition with Switching Costs and Network Effects," Handbook of Industrial Organization, in: Mark Armstrong & Robert Porter (ed.), Handbook of Industrial Organization, edition 1, volume 3, chapter 31, pages 1967-2072, Elsevier.
    3. Kelley, Maryellen R. & Harrison, Bennett, 1990. "The subcontracting behavior of single vs. multiplant enterprises in US manufacturing: Implications for economic development," World Development, Elsevier, vol. 18(9), pages 1273-1294, September.
    4. Mark Israel, 2005. "Tenure Dependence in Consumer-Firm Relationships: An Empirical Analysis of Consumer Departures from Automobile Insurance Firms," RAND Journal of Economics, The RAND Corporation, vol. 36(1), pages 165-192, Spring.
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    Cited by:

    1. Horgos, Daniel, 2009. "Labor market effects of international outsourcing: How measurement matters," International Review of Economics & Finance, Elsevier, vol. 18(4), pages 611-623, October.

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    Keywords

    Credit unions; Contracting out;

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