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Outsourcing, Product Quality, and Contract Enforcement

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  • Yi Lu
  • Travis Ng
  • Zhigang Tao

Abstract

Does outsourcing compromise product quality? Does sound contract enforcement alleviate this concern? We offer a simple model to illustrate how outsourcing leads to lower product quality and how contract enforcement helps mitigate this problem. These theoretical predictions are borne out of a survey of 2,400 firms in China conducted by the World Bank in 2003.

Suggested Citation

  • Yi Lu & Travis Ng & Zhigang Tao, 2012. "Outsourcing, Product Quality, and Contract Enforcement," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 21(1), pages 1-30, March.
    • Handle: RePEc:bla:jemstr:v:21:y:2012:i:1:p:1-30
    DOI: j.1530-9134.2011.00321.x
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    References listed on IDEAS

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    Cited by:

    1. Robinson, Michael A. & Stuebs, Martin & Wilfong, Lauren & Beard, Haylee, 2020. "The costs to bus go round and round: Charting a route to a decision," Journal of Accounting Education, Elsevier, vol. 50(C).
    2. Verena Nowak & Christian Schwarz & Jens Suedekum, 2012. "On the Organizational Structure of Multinational Firms - Which Sourcing Mode for which Input?," CESifo Working Paper Series 3823, CESifo.
    3. Sun, Sizhong & Anwar, Sajid, 2022. "Estimation of product quality in China's food processing and manufacturing industries," Economic Modelling, Elsevier, vol. 107(C).
    4. Ng, Travis, 2014. "Bailing outsourcing," Journal of Comparative Economics, Elsevier, vol. 42(4), pages 983-993.
    5. Tai‐Liang Chen & Zuyi Huang, 2020. "Technology licensing or cost‐reducing outsourcing? Game theoretical analysis on consumers' home bias effects and firms' optimal strategies," Bulletin of Economic Research, Wiley Blackwell, vol. 72(4), pages 417-433, October.
    6. Wadesango N & Gwangwadza D C & Mhaka C & Wadesango V O, 2018. "The Impact of Labour Force Reduction on the Financial Performance of Manufacturing Companies," Journal of Economics and Behavioral Studies, AMH International, vol. 10(2), pages 20-32.
    7. Sanxi Li & Xinyu Li & Zhan Qu, 2023. "Does vertical integration increase product quality?," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 11(1), pages 69-80, April.
    8. Sajid Anwar & Sizhong Sun, 2023. "Foreign direct investment and product quality in host economies," The World Economy, Wiley Blackwell, vol. 46(5), pages 1290-1318, May.
    9. Ng, Travis, 2013. "Information acquisition and institutions: An organizational perspective," Information Economics and Policy, Elsevier, vol. 25(4), pages 301-311.
    10. Li, Dong & Nagurney, Anna, 2015. "A general multitiered supply chain network model of quality competition with suppliers," International Journal of Production Economics, Elsevier, vol. 170(PA), pages 336-356.

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