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Article: Bi-sourcing in the global economy

TitleBi-sourcing in the global economy
Authors
Issue Date2009
PublisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jie
Citation
Journal Of International Economics, 2009, v. 77 n. 2, p. 215-222 How to Cite?
AbstractIn organizing production, many firms conduct bi-sourcing, i.e., acquiring the same set of inputs both by buying from external suppliers (outsourcing) and carrying out in-house production (insourcing). We show that, by adopting the bi-sourcing strategy, firms can use the payoff from one supplier as a backup option in negotiating with the other supplier (the cross-threat effect). When firms conduct bi-sourcing in the global economy consisting of the high-waged North and low-waged South, they need to make the location choice for both insourcing and outsourcing. We find that the low wage in the South can encourage investment by component suppliers (the cost effect). However, firms may achieve a better cross-threat effect by relocating overly strong component supplier from the cost-advantageous South to the cost-disadvantageous North (the balancing effect). The optimal bi-sourcing strategy is determined by the interplay of the cost effect and the balancing effect. © 2009 Elsevier B.V. All rights reserved.
Persistent Identifierhttp://hdl.handle.net/10722/60219
ISSN
2015 Impact Factor: 2.017
2015 SCImago Journal Rankings: 3.723
ISI Accession Number ID
References

 

DC FieldValueLanguage
dc.contributor.authorDu, Jen_HK
dc.contributor.authorLu, Yen_HK
dc.contributor.authorTao, Zen_HK
dc.date.accessioned2010-05-31T04:06:08Z-
dc.date.available2010-05-31T04:06:08Z-
dc.date.issued2009en_HK
dc.identifier.citationJournal Of International Economics, 2009, v. 77 n. 2, p. 215-222en_HK
dc.identifier.issn0022-1996en_HK
dc.identifier.urihttp://hdl.handle.net/10722/60219-
dc.description.abstractIn organizing production, many firms conduct bi-sourcing, i.e., acquiring the same set of inputs both by buying from external suppliers (outsourcing) and carrying out in-house production (insourcing). We show that, by adopting the bi-sourcing strategy, firms can use the payoff from one supplier as a backup option in negotiating with the other supplier (the cross-threat effect). When firms conduct bi-sourcing in the global economy consisting of the high-waged North and low-waged South, they need to make the location choice for both insourcing and outsourcing. We find that the low wage in the South can encourage investment by component suppliers (the cost effect). However, firms may achieve a better cross-threat effect by relocating overly strong component supplier from the cost-advantageous South to the cost-disadvantageous North (the balancing effect). The optimal bi-sourcing strategy is determined by the interplay of the cost effect and the balancing effect. © 2009 Elsevier B.V. All rights reserved.en_HK
dc.languageengen_HK
dc.publisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jieen_HK
dc.relation.ispartofJournal of International Economicsen_HK
dc.rightsJournal of International Economics . Copyright © Elsevier BV.en_HK
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.titleBi-sourcing in the global economyen_HK
dc.typeArticleen_HK
dc.identifier.openurlhttp://library.hku.hk:4550/resserv?sid=HKU:IR&issn=0022-1996&volume=77&spage=206&epage=214&date=2009&atitle=Bi-sourcing+in+the+Global+Economyen_HK
dc.identifier.emailLu, Y: xzhongkanson@business.hku.hken_HK
dc.identifier.emailTao, Z: ztao@hku.hken_HK
dc.identifier.authorityLu, Y=rp01081en_HK
dc.identifier.authorityTao, Z=rp01097en_HK
dc.description.naturepostprint-
dc.identifier.doi10.1016/j.jinteco.2009.01.005en_HK
dc.identifier.scopuseid_2-s2.0-61349092820en_HK
dc.identifier.hkuros165098en_HK
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-61349092820&selection=ref&src=s&origin=recordpageen_HK
dc.identifier.volume77en_HK
dc.identifier.issue2en_HK
dc.identifier.spage215en_HK
dc.identifier.epage222en_HK
dc.identifier.isiWOS:000264674400007-
dc.publisher.placeNetherlandsen_HK
dc.identifier.scopusauthoridDu, J=8850784100en_HK
dc.identifier.scopusauthoridLu, Y=54901610300en_HK
dc.identifier.scopusauthoridTao, Z=7201884505en_HK

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