Outsourcing and its implications for market success : negative curvilinearity, firm resources, and competition

Over the past few decades, outsourcing has become a widely discussed and researched means for firms to change their performance. In this article, we attempt to link outsourcing to the market success of firms, specifically their market share. We argue that although firms may be able to increase their market share through outsourcing, this is only true up to a point, beyond which market share actually decreases as a consequence of further outsourcing. There is, in other words, a negatively curvilinear (inverted U) relationship between outsourcing and market share. We also hypothesize that the outsourcing–market share relationship is moderated negatively by both the strength of firm resources and the extent of competition in a firm‘s market. We empirically confirm these arguments through a panel data analysis containing over 19,000 observations on manufacturing firms, and offer some case examples to illustrate the mechanisms driving these results. We discuss implications for marketing research and practice

The 'True' Cost of Mitigating Commodity Price Volatility: Insights from Total Cost of Ownership and Real Options Approach

Many firms have an array of available approaches for reducing finan-cial losses caused by commodity price changes. This chapter provides guidance for more accurately measuring the potential financial effects of commodity price risk mitigation approach selection. Based upon two prominent methodologies, namely Total Cost of Ownership (TCO) and Real Options Approach (ROA), this chapter illustrates how commodity price risk mitigation strategies can be analyzed with respect to their effect on costs and performance. A practical example is provided to illustrate how TCO and ROA can provide useful insight in measuring the costs and benefits related to mitigating the effects of commodity price volatility

Costs of partner search and selection in strategic alliances

This study examines the costs of alliance partner search and selection and their antecedents. Drawing on transaction cost economics and the network perspective on inter-organizational relationships, the findings drawing on survey-based data from a sample of 83 firms in the German telecommunications industry reveal that partner search and selection costs are closely connected but differentially affected by task- and company-related factors. When firms must make alliance-specific investments, search and selection costs increase. A firm’s number of current alliances decreases them, while neither alliance scope nor firm performance significantly affect search and selection costs. Additional analyses show that alliance-specific investments especially increase search costs but do not affect selection costs, while the initiating firm’s performance decreases search costs but it does not reduce selection costs