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

Sangho Chae, Benn Lawson, Thomas Kull, Thomas Choi

Research output: Contribution to journalArticleScientificpeer-review

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 is 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.
Original languageEnglish
JournalInternational Journal of Operations and Production Management
DOIs
Publication statusE-pub ahead of print - 2019

Fingerprint

Managers
Decision making
Outsourcing
Sourcing
Sourcing decisions
Supply chains
Sales
Suppliers
Uncertainty
Influencing factors
Familiarity
Behavioral decision making

Keywords

  • interpersonal trust
  • multi-tier sourcing
  • behavioural experiment
  • sourcing strategy
  • behavioural uncertainty

Cite this

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title = "To insource or outsource the sourcing? A behavioral investigation of the multi-tier sourcing decision",
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 is 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.",
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To insource or outsource the sourcing? A behavioral investigation of the multi-tier sourcing decision. / Chae, Sangho; Lawson, Benn; Kull, Thomas; Choi, Thomas.

In: International Journal of Operations and Production Management, 2019.

Research output: Contribution to journalArticleScientificpeer-review

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