Excerpt from Supplier Competition, Uncertainty and Make or Buy DecisionsOrganizations are frequently confronted with the decision to make or buy a good or service. Both prescriptive frameworks for managers (culliton, 1942; Gambino, 1980) and economic theory (williamson, 1975, 1981 have focused on cost factors as the most important determinants of make or buy decisions, although there are differences about how costs should be defined and which costs are relevant. In a previous paper (walker and Weber, 1984) we examined the effects of two types of cost, transaction and production, on make or buy decisions and found that both types of cost influenced decision outcomes, although the hypotheses for transaction costs were only partially confirmed. In the present study, by introducing new data about the sample of decisions investigated and extending the theory of the original research, we elaborate on its findings, counter potentially confounding hypotheses, and identify more precisely the limits of its generalizability.The make or buy decisions we study were made by managers in a division of a large US automobile firm for components of assemblies and subassemblies the division manufactured. All but two of the components in our sample were previously made or bought by the division, and all the components were either parts of new cars or replacement parts for old models. Therefore, the division faced the problem of managing potentially recurrent contracts with suppliers.About the PublisherForgotten Books publishes hundreds of thousands of rare and classic books.

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