To insource or outsource the sourcing? A behavioral investigation of the multi-tier sourcing decision

Sangho Chae (Department of Management, Tilburg School of Economics and Management, Tilburg University, Tilburg, The Netherlands) (Department of Management, College of Business Administration, Marquette University, Milwaukee, Wisconsin, USA)
Benn Lawson (Cambridge Judge Business School, University of Cambridge, Cambridge, UK)
Thomas J. Kull (Department of Supply Chain Management, W.P. Carey School of Business, Arizona State University, Tempe, Arizona, USA)
Thomas Choi (Department of Supply Chain Management, W.P. Carey School of Business, Arizona State University, Tempe, Arizona, USA)

International Journal of Operations & Production Management

ISSN: 0144-3577

Publication date: 3 May 2019

Abstract

Purpose

The purpose of this paper is to investigate the behavioral tendencies of supply managers when they are faced with uncertainty in making multi-tier sourcing decisions.

Design/methodology/approach

This paper uses the literature on multi-tier supply chains and behavioral decision making to develop a theoretical framework for examining factors influencing a supply manager’s decision to retain control over sourcing in the multi-tier context. An experimental vignette methodology is used to gather data from 259 supply managers.

Findings

Results suggest that supply managers choose to exert less multi-tier control when they have high levels of interpersonal trust in the tier-1 supplier’s sales representative. This effect is accentuated by a high level of familiarity with potential lower-tier suppliers. Under high levels of familiarity with potential lower-tier suppliers, supply managers will exert greater levels of multi-tier sourcing control as the behavioral uncertainty of the tier-1 supplier increases.

Practical implications

Buying firms can enhance their understanding of supply managers’ multi-tier sourcing decision making and the potential biases associated with it. Suggestions for a more effective use of multi-tier sourcing are provided in the Discussion section.

Originality/value

Multi-tier sourcing is an increasingly important area of research, and this paper is the first to examine individual supply managers’ behavioral decision making in the multi-tier context. This paper also contributes to the outsourcing literature by investigating behavioral factors influencing the outsourcing of sourcing activities.

Keywords

Citation

Chae, S., Lawson, B., Kull, T. and Choi, T. (2019), "To insource or outsource the sourcing? A behavioral investigation of the multi-tier sourcing decision", International Journal of Operations & Production Management, Vol. 39 No. 3, pp. 385-405. https://doi.org/10.1108/IJOPM-04-2018-0231

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Publisher

:

Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited

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