Determinants and Management of Make-and-Buy: An Extension to Transaction Cost Economics

Foreword In her dissertation Anna Krzeminska deals with the determinants and the management of make-and-buy decisions. Make-and-buy describes the simultaneous use of in-house prod- tion and external procurement of a good or service. Today make-and-buy can be found in many industries and corporate sectors; the simultaneous use of in-house production and external procurement can, for example, be found in the automotive, telecommunications, and IT industry, as well as in pharmaceutical research-and-development projects, the assignment of sales representatives, and in franchising businesses. Make-or-buy, in contrast, refers to the decision between the alternatives of in-house production versus external procurement (e.g. Boerner and Macher 2002) and has been studied extensively. Studies relating to the ma- and-buy perspective, however, are rare. Anna Krzeminska approaches this gap in the literature in the here presented thesis by investigating determinants, management, and performance implications of make-and-buy. Firstly, Anna Krzeminska reviews the existing research on make-and-buy. She points out that, in spite of a thorough literature research, merely 17 contributions on make-and-buy in the industrial purchasing context could be identified over the last 30 years. Analyzing the existing literature, she discovers an interesting paradox: while there is no evident consensus in the literature on whether transaction cost economics (TCE) is a useful approach to explain ma- and-buy, she finds that TCE is by far the predominant approach used to explain this phe- menon. Against this background she proceeds by systematically scrutinize the potential of TCE to explain make-and-buy.