How Multi-Sourcing Can Influence Management Control: Case Study Evidence From the Electronic Products Supply Chain
46 Pages Posted: 21 Sep 2022
Date Written: August 2022
This study investigates how multi-sourcing can influence the use of management controls in the presence of varying buyer-supplier power dependencies. Multi-sourcing is an interorganizational design choice that can help buyers collect valuable information to facilitate cost and performance comparisons across multiple sources of supply. We leverage prior research to develop a conceptual framework that highlights how multi-sourcing can enable buyers to use cost management and performance management controls differently depending on the nature of buyer-supplier power dependencies. We then use case studies of three electronic product manufacturers to illustrate the framework, yielding empirically testable propositions regarding when multi-sourcing may enable cost management controls, performance management controls, and both types of control. The evidence demonstrates the importance of simultaneously considering multiple interorganizational design choices when studying management controls in supply chains. We also highlight how multi-sourcing may help supply chains promote non-financial goals, including those related to environmental and social activities.
Keywords: Management controls, Performance management, Cost management, Interfirm relationships, Competitive priorities, Information technology industry.
JEL Classification: M40, M41, M16, L23, L24, L63
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