HCBE Faculty Presentations

Event Location / Date(s)

50th Annual Meeting of the Academy of International Business/Milan, Italy

Event Name / Location

Proceedings of the 50th Annual Meeting of the Academy of International Business "Knowledge Development and Exchange in International Business Networks"

Presentation Date

7-2-2008

Document Type

Conference Proceeding

Description

This paper presents empirical findings regarding mode of governance and five dimensions of transaction costs. We discuss transaction cost economics in relation to the concept of outsourcing offshore, building hypotheses for testing. Starting with Coase (1937) academics have developed theory proposing that there are costs involved in organizing and managing transactions, both firm and market based. As firms vertically integrate or disaggregate in order to improve performance measured by profits, outsourcing has become more common as a way to take advantage of improved margins available in the market rather than in the traditional hierarchy. Outsourcing has quickly evolved to include resource-seeking sources, not only domestically but also internationally, as international market solutions have become a more available method of outsourcing, a practice that is now termed off-shoring. This paper provides a literature review of TCE and discusses the history of and developments in off-shoring. The results show significant support linking mode of governance to three dimensions of TCE; asset specificity, supplier dependence and environmental uncertainty. The relationships of mode of governance to technological unpredictability and to monitoring costs are not supported by the data analysis.

First Page

130

Last Page

130

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