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 journalArticle

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.

Original languageEnglish (US)
Pages (from-to)385-405
Number of pages21
JournalInternational Journal of Operations and Production Management
Volume39
Issue number3
DOIs
StatePublished - May 3 2019

Fingerprint

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

Keywords

  • Behavioural experiment
  • Behavioural uncertainty
  • Interpersonal trust
  • Multi-tier sourcing
  • Sourcing strategy

ASJC Scopus subject areas

  • Decision Sciences(all)
  • Strategy and Management
  • Management of Technology and Innovation

Cite this

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, 03.05.2019, p. 385-405.

Research output: Contribution to journalArticle

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