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Impact of industry competition on contract manufacturing: An empirical study of U.S. manufacturers

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  • Han, Chaodong
  • Porterfield, Tobin
  • Li, Xiaolin

Abstract

Anecdotal evidence from U.S. manufacturers and literature from strategy and operations research suggest that industry competition may be driving firm contract manufacturing decisions. However, there is little empirical research regarding specific drivers of contract manufacturing, particularly the effect of supplier industry competition on the use of contract manufacturing in the focal industry and how this relationship may be conditioned and moderated by focal industry characteristics. Grounded in Porter's Five-Force Model and Value Chain Perspective, the current study purports to address this research gap through an empirical examination of a panel dataset on all U.S. manufacturing industries, collected from the U.S. Economic Census. Regression results show that contract manufacturing is positively associated with supplier industry competition and the association is further moderated by focal industry competition and IT investment.

Suggested Citation

  • Han, Chaodong & Porterfield, Tobin & Li, Xiaolin, 2012. "Impact of industry competition on contract manufacturing: An empirical study of U.S. manufacturers," International Journal of Production Economics, Elsevier, vol. 138(1), pages 159-169.
    • Handle: RePEc:eee:proeco:v:138:y:2012:i:1:p:159-169
    DOI: 10.1016/j.ijpe.2012.03.015
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