How does outsourcing affect performance dynamics?: Evidence from the automobile industry
This paper examines the impact of vertical integration on the dynamics of performance over the automobile product development lifecycle. Building on recent work in organizational economics and strategy, we evaluate the relationship between vertical integration and different performance margins. Outs...
Gespeichert in:
| Hauptverfasser: | , |
|---|---|
| Format: | Buch |
| Sprache: | English |
| Veröffentlicht: |
Cambridge, Mass.
National Bureau of Economic Research
2007
|
| Schriftenreihe: | Working paper series / National Bureau of Economic Research
13235 |
| Online-Zugang: | Volltext |
| Zusammenfassung: | This paper examines the impact of vertical integration on the dynamics of performance over the automobile product development lifecycle. Building on recent work in organizational economics and strategy, we evaluate the relationship between vertical integration and different performance margins. Outsourcing facilitates access to cutting-edge technology and the use of high-powered performance contracts. Vertical integration allows firms to adapt to unforeseen contingencies and customer feedback, maintain more balanced incentives over the lifecycle, and develop firm-specific capabilities over time. Together, these effects highlight a crucial tradeoff: while outsourcing is associated with higher levels of initial performance, vertical integration will be associated with performance improvement over the product lifecycle. We test these ideas using detailed data from the luxury automobile segment, establishing three key results. First, initial performance is declining in the level of vertical integration. Second, the level of performance improvement is significantly increasing in the level of vertical integration. Finally, the impact of vertical integration on alternative performance margins is mediated by the level of pre-existing capabilities, by the salience of opportunities to access external technology leaders, and by the scope for learning over the product lifecycle. Together, the findings highlight a strategic governance tradeoff between short-term performance and the evolution of firm capabilities. |
| Beschreibung: | Literaturverz. S. 25 - 28 |
| Beschreibung: | 43 S. graph. Darst. 22 cm |
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| 520 | 8 | |a This paper examines the impact of vertical integration on the dynamics of performance over the automobile product development lifecycle. Building on recent work in organizational economics and strategy, we evaluate the relationship between vertical integration and different performance margins. Outsourcing facilitates access to cutting-edge technology and the use of high-powered performance contracts. Vertical integration allows firms to adapt to unforeseen contingencies and customer feedback, maintain more balanced incentives over the lifecycle, and develop firm-specific capabilities over time. Together, these effects highlight a crucial tradeoff: while outsourcing is associated with higher levels of initial performance, vertical integration will be associated with performance improvement over the product lifecycle. We test these ideas using detailed data from the luxury automobile segment, establishing three key results. First, initial performance is declining in the level of vertical integration. Second, the level of performance improvement is significantly increasing in the level of vertical integration. Finally, the impact of vertical integration on alternative performance margins is mediated by the level of pre-existing capabilities, by the salience of opportunities to access external technology leaders, and by the scope for learning over the product lifecycle. Together, the findings highlight a strategic governance tradeoff between short-term performance and the evolution of firm capabilities. | |
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| index_date | 2024-07-02T22:41:31Z |
| indexdate | 2024-07-09T21:25:14Z |
| institution | BVB |
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| spelling | Novak, Sharon 1971- Verfasser (DE-588)133485323 aut How does outsourcing affect performance dynamics? Evidence from the automobile industry Sharon Novak ; Scott Stern Cambridge, Mass. National Bureau of Economic Research 2007 43 S. graph. Darst. 22 cm txt rdacontent n rdamedia nc rdacarrier Working paper series / National Bureau of Economic Research 13235 Literaturverz. S. 25 - 28 This paper examines the impact of vertical integration on the dynamics of performance over the automobile product development lifecycle. Building on recent work in organizational economics and strategy, we evaluate the relationship between vertical integration and different performance margins. Outsourcing facilitates access to cutting-edge technology and the use of high-powered performance contracts. Vertical integration allows firms to adapt to unforeseen contingencies and customer feedback, maintain more balanced incentives over the lifecycle, and develop firm-specific capabilities over time. Together, these effects highlight a crucial tradeoff: while outsourcing is associated with higher levels of initial performance, vertical integration will be associated with performance improvement over the product lifecycle. We test these ideas using detailed data from the luxury automobile segment, establishing three key results. First, initial performance is declining in the level of vertical integration. Second, the level of performance improvement is significantly increasing in the level of vertical integration. Finally, the impact of vertical integration on alternative performance margins is mediated by the level of pre-existing capabilities, by the salience of opportunities to access external technology leaders, and by the scope for learning over the product lifecycle. Together, the findings highlight a strategic governance tradeoff between short-term performance and the evolution of firm capabilities. Stern, Scott 1969- Verfasser (DE-588)130571741 aut Erscheint auch als Online-Ausgabe National Bureau of Economic Research <Cambridge, Mass.> NBER working paper series 13235 (DE-604)BV002801238 13235 http://papers.nber.org/papers/w13235.pdf kostenfrei Volltext |
| spellingShingle | Novak, Sharon 1971- Stern, Scott 1969- How does outsourcing affect performance dynamics? Evidence from the automobile industry |
| title | How does outsourcing affect performance dynamics? Evidence from the automobile industry |
| title_auth | How does outsourcing affect performance dynamics? Evidence from the automobile industry |
| title_exact_search | How does outsourcing affect performance dynamics? Evidence from the automobile industry |
| title_exact_search_txtP | How does outsourcing affect performance dynamics? Evidence from the automobile industry |
| title_full | How does outsourcing affect performance dynamics? Evidence from the automobile industry Sharon Novak ; Scott Stern |
| title_fullStr | How does outsourcing affect performance dynamics? Evidence from the automobile industry Sharon Novak ; Scott Stern |
| title_full_unstemmed | How does outsourcing affect performance dynamics? Evidence from the automobile industry Sharon Novak ; Scott Stern |
| title_short | How does outsourcing affect performance dynamics? |
| title_sort | how does outsourcing affect performance dynamics evidence from the automobile industry |
| title_sub | Evidence from the automobile industry |
| url | http://papers.nber.org/papers/w13235.pdf |
| volume_link | (DE-604)BV002801238 |
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