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
Pages (from-to)385-405
JournalInternational Journal of Operations and Production Management
Volume39
Issue number3
DOIs
Publication statusPublished - 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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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, Vol. 39, No. 3, 2019, p. 385-405.

Research output: Contribution to journalArticleScientificpeer-review

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