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Research seminar with Professor Mari Sako
November 29, 2013 @ 12:00 pm - 1:15 pm
Mari Sako is Professor of Management Studies at Saïd Business School, Co-Director of the Novak Druce Centre for Professional Service Firms and a Professorial Fellow of New College, Oxford. Mari’s research focus has been on comparative business systems, global value chains in business services and professions and professional service firms, most recently including the impact of outsourcing.
Read Mari’s full profile here.
How Do Firms Make-and-Buy? The Case of Legal Services Sourcing by Fortune 500 Companies
Recent strategy research explains why firms sometimes make-and-buy (not make-or-buy) products simultaneously, but lacks explanations of how they strike the make-buy balance. We respond by developing a framework featuring two determinants of the balance: resource co-specialization and supplier portfolio selection. Analyses of in-house lawyers at, and law firms doing work for, Fortune 500 firms provide evidence that firms tilt the balance in favor of ‘make’ whenever opportunities for resource co-specialization exist, and in favor of ‘buy’ when they can reduce contracting costs by selecting a concentrated portfolio of suppliers with broad capabilities. We contribute new insight on firm boundaries by integrating capabilities and transaction cost theories of the firm, and by examining inter-related transactions within a corporate function to determine the make-buy balance.