Controls as Exit Barriers in Multiperiod Outsourcing Arrangements

Yee Shih Phua; Abernethy, Margaret A.; Lillis, Anne M.
September 2011
Accounting Review;Sep2011, Vol. 86 Issue 5, p1795
Academic Journal
This study explores how initial control choice influences the ease with which outsourcing firms switch suppliers. We recognize that firms invest in controls to manage collaborative relationships, and argue that these investments generate switching costs, namely, opportunity and reinvestment costs. We collect data on outsourcing transactions by conducting semi-structured interviews across multiple field sites. Observed patterns across 53 cases show that firms with trust-based controls experience the most difficulty in switching suppliers, whereas firms with market-based controls experience the greatest ease. Firms with bureaucratic-based and hybrid controls generally lie between these extremes. Furthermore, in nearly 50 percent of our sample (25 cases), respondents indicate that the switching costs associated with control choices increase the difficulty of switching suppliers. We also find evidence that the magnitude and nature of switching costs vary with the types of controls chosen.


Related Articles

  • Cheaper by what Measure? Field, Alan M. // Journal of Commerce (1542-3867);10/3/2005, Vol. 6 Issue 40, pL-19 

    Focuses on the disadvantages of sourcing from low-cost suppliers overseas to cut expenses and increase competitiveness. Failure to recognize the impact of sourcing from low-cost countries on supply chain spending; Need for companies to hire third-party experts in venturing into low-cost...

  • Comparative Analysis of Role of Various Logistic Intermediaries Participating in the Supply Chains. A. Vasilis Vasiliauskas; Barysiene, J. // Transport Means 2008: Proceedings of the 12th International Conf;2008, p159 

    This article intends to provide comparison between the possible supply chain setups involving different actors, as well as to explain different roles of those logistics intermediaries. In order to achieve this goal reasons behind the application of 3PL services in supply chain are examined...

  • Logistics: The last savings domain in the plastics industry. Borkowski, Mark // Canadian Plastics;Jul/Aug2009, Vol. 67 Issue 5, p10 

    The article points out the advantages of outsourcing the supply chain functions of plastic companies, the most important of which is the improvement of productivity through faster and cheaper services offered by specialist providers of third-party logistics companies. Advantages include reduced...

  • Survival chain. BARTRAM, PETER // Logistics Manager;Oct2011, p33 

    The author discusses the importance of business networking by meeting contacts personally in the supply chain industry. He agrees that a well-developed business network can provide insights into the business viability of services and products and make dealing with difficult issues such as cost...

  • FINDING THE RIGHT FIT. Cain, Ron // Journal of Commerce (1542-3867);5/10/2010, Vol. 11 Issue 19, p22 

    The article discusses the importance of finding the right technology to make it possible for a company to link up with its network of suppliers and consumers. It describes several solutions available for creating the best infrastructure in information technology (IT) and supply chain management...

  • Choose your 3PL 'specialist' wisely. Walker, Chartie // Motor Transport;11/2/2015, p22 

    The article offers tips to businesses that outsource control of their supply chain function to choose third-party logistics provider.

  • In the driver's seat. Field, Alan M. // Journal of Commerce (1542-3867);10/3/2005, Vol. 6 Issue 40, p24 

    Focuses on the use of third-party logistics services by automobile manufacturers to coordinate delivery of components sourced overseas. Influence of the supply chain on the value of vehicles; Implementation of supply chain management solutions in the automotive sector according to a report by...

  • In the Store or at Your Door. Hall, Karen // World Trade: WT100;May2010, Vol. 23 Issue 5, p47 

    The article discusses how consumer packaged groups (CPG) and 3rd party logistics (3PL) companies cope with ever-changing consumer preferences. CPG companies work with their 3PLs to help them manage supply chain complexities and issues such as speed to market deliveries, manageable inventory, and...

  • Logistics Service Providers in Internet Supply Chains. Rabinovich, Elliot; Knemeyer, A. Michael // California Management Review;Summer2006, Vol. 48 Issue 4, p84 

    Logistics services and their providers are helping intermediaries add value to Internet supply chains in ways that are not always immediately obvious. Thus, it is not surprising that there is confusion among academics and practitioners about how best to extract value from such services and...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics