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

Accepted version
Peer-reviewed

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Type

Article

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Authors

Chae, S 
Kull, T 
Choi, T 

Abstract

Purpose – This paper investigates the behavioral tendencies of supply managers when 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 examining factors influencing a supply manager’s decision to retain control over lower-tier 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 discussed. 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.

Description

Keywords

3509 Transportation, Logistics and Supply Chains, 35 Commerce, Management, Tourism and Services, 3507 Strategy, Management and Organisational Behaviour, Behavioral and Social Science

Journal Title

International Journal of Operations and Production Management

Conference Name

Journal ISSN

0144-3577
1758-6593

Volume Title

39

Publisher

Emerald