Value Creation and Value Claiming in Make-Or-Buy Decisions
AbstractTransaction value analysis (TVA) integrates the concepts of resourceheterogeneity and transaction cost economics into a single framework,which emphasizes both value creation and value claiming in firms'vertical integration decisions. Using a TVA perspective, we develophypotheses to explain the firm's intent to outsource applicationservices. A sample of 178 firms in the publishing and printingindustry in The Netherlands is used to test the hypotheses. This paperfinds that firms take both value-creation and value-claimingmotivations into consideration, with value creation having on averagea dominating impact, thus substantiating the TVA framework. However,we also find that if the risks of opportunism in outsourcingcontracting are high, value creation becomes the less important factorin make-or-buy decisions. Furthermore, the paper shows that the needfor flexibility is a major driver of governance choice forvalue-creation as well as for value-claiming motivations. Implicationsand future research directions are discussed.
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Bibliographic InfoPaper provided by Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam. in its series Research Paper with number ERS-2002-90-STR.
Date of creation: 22 Oct 2002
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Web page: http://www.erim.eur.nl/
information technology; interorganizational strategy; make-or-buy decisions; outsourcing relationships; transaction value analysis;
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