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Make or Buy in a mature industry? Models of client-supplier relationships under TCT and RBV perspectives

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Author Info
Manuel Portugal Ferreira () (Escola Superior de Tecnologia e Gestão - Instituto Politécnico de Leiria)
Fernando A. Ribeiro Serra () (UNISUL ? Universidade do Sul de Santa Catarina)

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Abstract

In this paper, we use the transaction cost theory (TCT) and the resource-based view (RBV) to discuss three propositions on the models of client-supplier relationships in mature industries. The two theories seem to advance different organizational forms of the client-supplier relationships, and in some instances contradictory. How should firms organize to prosper and grow, namely in the international markets? Through the case study of three Portuguese packaging firms, with primary (interviews) and secondary data, we discuss how the three firms deploy three distinct strategic organization models in a mature industry. One firm utilizes market-based governance mechanisms, and concentrates its production in a few selected locations. Another firm vertically integrates almost the entire value chain of the product to provide full service to its clients. The third firm operates in a model of integrated outsourcing, with the installation "wall to wall" to its clients. The models client-supplier assumed by these firms are based on efficient, stable, and trustworthy relationships, that permit the focus on their core competences and the reduction of the transaction costs. Firms? superior performance requires a proper alignment of hierarchical and relational governance taking in consideration the dimensions of the transactions.

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Publisher Info
Paper provided by globADVANTAGE, Polytechnic Institute of Leiria in its series Working Papers with number 37.

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Date of creation: 10 Sep 2009
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Handle: RePEc:pil:wpaper:37

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Web page: http://www.globadvantage.ipleiria.pt
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Related research
Keywords: Client-supplier relationship models; Outsourcing; TCT; RBV; Strategic Governance;

Find related papers by JEL classification:
M0 - Business Administration and Business Economics; Marketing; Accounting - - General
M1 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration

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This page was last updated on 2009-11-24.

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