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Make, buy or ally? Comparing practical software sourcing decision factors with transaction cost economics, resource-based and knowledge-based view: a case study in the automobile industry

Wiegard, S.W. (2020) Make, buy or ally? Comparing practical software sourcing decision factors with transaction cost economics, resource-based and knowledge-based view: a case study in the automobile industry.

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Abstract:Several theories that determine the boundaries of the firm exist. Amongst those are the theory of transaction cost economics, the resource-based view and the knowledge-based view, which all contain a framework that gives recommendations about preferred sourcing models. Those proposed optimal sourcing models of each theory deviate from one another and uncertainty about whether those theories are applicable for any good or service, exist. To test whether the factors influencing the sourcing decision mentioned in the theories and their resulting sourcing recommendations are also suitable for the procurement of software, the present qualitative research study has been conducted. An automotive company, sourcing amongst others embedded software, was used as a case company to determine the applicability of TCE, RBV and KBV in the field of software sourcing. The frameworks of the three theories were combined into one research model to detect the similarities and differences between the theoretical research model and the practical sourcing recommendations. After combining the theoretical frameworks, a world café in the purchasing department and seven stakeholder interviews were executed, leading to a total of nine detected factors that influence the software sourcing decision in practice. The degree of software standardization, availability of internal and external resources, time-to-market pressure, unique selling point, business strategy, total cost, supplier risk and governmental issues were found to influence the sourcing model decision of software in the case company. Six of those identified factors are not included in the theoretical view, indicating that the theoretical factors influencing the sourcing decision are not complete and only partially applicable to the process of software sourcing. The results show that combining TCE, RBV and KBV into one framework lead to a more powerful practical approach while simultaneously demonstrating that the theoretical framework needs adjustment to fit the sourcing environment of software.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:http://purl.utwente.nl/essays/80900
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