Make or buy in a mature industry? models of client - supplier relationships under TCT and RBV perspectives

In this paper, we use the transaction cost theory [ TCT] and the resource-based view [RBV] to discuss three propositions on the models of client-supplier relat ionships in mature industries. The two theories see m to advance different organizational forms of the clien t-supplier relationships, and in some instances are contradictory. How should firms organize to prosper and grow, namely in the international markets? Thr ough the case study of three Portuguese packaging firms, wit h primary (interviews) and secondary data, we discu ss how the three firms deploy three distinct strategic org anization models in a mature industry. One firm uti lizes marketbased governance mechanisms, and concentrates its production in a few selected locations. Another firm vertically integrates almost the entire value chain of the product to provide full service to its clie nts. The third firm operates in a model of integrated outsourcing, with the installation wall to wall with its clients. The clientsupplier models adopted by these firms are based on efficient, stable, and trustworthy relationships t hat permit them to focus on their core competences and reduce transaction costs. The superior performance of firm s requires a proper alignment of hierarchical and rel ational governance, taking the dimensions of their transactions into consideration.

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