Sourcing practices and boundaries of the firm in the financial services industry

We investigate sourcing decisions related to the back-office operations of 108 processes used by financial services companies. Guided by the arguments of transaction cost economics and the resource-based and knowledge-based view of organizations, we hypothesize that service customization and volume...

Full description

Saved in:
Bibliographic Details
Published in:Strategic management journal 2008-01, Vol.29 (1), p.79-91
Main Authors: Safizadeh, M. Hossein, Field, Joy M., Ritzman, Larry P.
Format: Article
Language:English
Subjects:
Asset management
Building customization
Business organization
Business services
Business strategies
Business studies
Customization
dynamic boundaries of the firm
Extractive industries
Finance companies
Financial services
Financial services industries
Investment management companies
Opportunistic behavior
Outsourcing
resource-based view of the firm
Service industry
Sourcing
Studies
transaction cost economics
Transaction costs
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:We investigate sourcing decisions related to the back-office operations of 108 processes used by financial services companies. Guided by the arguments of transaction cost economics and the resource-based and knowledge-based view of organizations, we hypothesize that service customization and volume represent two key drivers of a service company's sourcing decisions. The inherent uncertainty of service customization gives rise to the transaction cost risks of opportunism and holdups and thus favors insourcing. Moreover, the competency gained from performing high-volume back-office operations aligns with the tenets of the resource-based view, which also favors insourcing. The empirical results corroborate these theoretical expectations.
ISSN:0143-2095
1097-0266
DOI:10.1002/smj.641