Transaction value analysis (TVA) integrates the concepts of resource
heterogeneity 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 develop
hypotheses to explain the firm's intent to outsource application
services. A sample of 178 firms in the publishing and printing
industry in The Netherlands is used to test the hypotheses. This paper
finds that firms take both value-creation and value-claiming
motivations into consideration, with value creation having on average
a dominating impact, thus substantiating the TVA framework. However,
we also find that if the risks of opportunism in outsourcing
contracting are high, value creation becomes the less important factor
in make-or-buy decisions. Furthermore, the paper shows that the need
for flexibility is a major driver of governance choice for
value-creation as well as for value-claiming motivations. Implications
and future research directions are discussed