The Effect of Coordination Requirements on Sourcing Decisions: Evidence from Patent Prosecution Services

Forthcoming at the Strategic Management Journal

54 Pages Posted: 8 Jul 2021 Last revised: 16 Nov 2021

See all articles by George Chondrakis

George Chondrakis

ESADE Business School

Eduardo Melero

Universidad Carlos III de Madrid - Department of Business Administration

Mari Sako

University of Oxford - Said Business School

Date Written: July 2, 2021

Abstract

Although the link between coordination requirements and vertical integration is theoretically well established, empirical tests of this relationship are hard to implement due to the simultaneous determination of both variables. In this study, we take advantage of regulatory changes in patent prosecution in the US to provide plausibly causal evidence linking increases in coordination requirements with insourcing. Moreover, we examine the role of plural sourcing, i.e. simultaneously making and buying, when responding to changes in coordination requirements. We find that the move towards insourcing is more pronounced for plural sourcing firms as compared to firms relying on outsourcing. These results are consistent with the view that plural sourcing provides firms with flexibility to switch between sourcing modes when facing changing coordination requirements.

Keywords: vertical integration, coordination, plural sourcing, AIPA, patent prosecution

JEL Classification: L20, O32, O34

Suggested Citation

Chondrakis, George and Melero, Eduardo and Sako, Mari, The Effect of Coordination Requirements on Sourcing Decisions: Evidence from Patent Prosecution Services (July 2, 2021). Forthcoming at the Strategic Management Journal, Available at SSRN: https://ssrn.com/abstract=3878999 or http://dx.doi.org/10.2139/ssrn.3878999

George Chondrakis (Contact Author)

ESADE Business School ( email )

Av. de Pedralbes, 60-62
Barcelona, 08034
Spain

Eduardo Melero

Universidad Carlos III de Madrid - Department of Business Administration ( email )

Calle Madrid 126
Getafe, Madrid, Madrid 28903
Spain

Mari Sako

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

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