Does Ownership Affect the Variability of the Production Process? Evidence from International Courier Services

45 Pages Posted: 20 May 2002 Last revised: 4 Aug 2008

See all articles by Chihmao Hsieh

Chihmao Hsieh

Yonsei University

Sérgio G. Lazzarini

Insper Institute of Education and Research

Jackson A. Nickerson

Washington University in St. Louis - John M. Olin Business School

Marcio Laurini

Ibmec, Sao Paulo

Date Written: July 17, 2008

Abstract

While transaction-cost economics has considered the effect of make-or-buy decisions on expected product performance, research has not explored the effect of make-or-buy decisions on variability of product performance (i.e., reliability). We argue that firms that differentiate their products by pursuing low variability face exchange attributes for which outsourcing the corresponding performs worse than vertical integration. Nonparametric density estimation and parametric tests of variance from Japanese International Courier and Small Packages services industry data provide general support for our hypothesis.

Keywords: Outsourcing, vertical integration, reliability, quality

JEL Classification: C14, L10, L14, L93

Suggested Citation

Hsieh, Chihmao and Lazzarini, Sérgio Giovanetti and Nickerson, Jackson A. and Laurini, Marcio, Does Ownership Affect the Variability of the Production Process? Evidence from International Courier Services (July 17, 2008). Available at SSRN: https://ssrn.com/abstract=309622 or http://dx.doi.org/10.2139/ssrn.309622

Chihmao Hsieh (Contact Author)

Yonsei University ( email )

Seoul
Korea, Republic of (South Korea)

Sérgio Giovanetti Lazzarini

Insper Institute of Education and Research ( email )

R Quata 300
Sao Paulo, 04542-030
Brazil
55-11-45042387 (Phone)

HOME PAGE: http://www.sergiolazzarini.insper.edu.br/indexelazza.html

Jackson A. Nickerson

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States
314-935-6366 (Phone)
314-935-6359 (Fax)

Marcio Laurini

Ibmec, Sao Paulo ( email )

Rua Quatá 300
V Olimpia
São Paulo, São Paulo 04546-042
Brazil

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