Transaction Costs in Global Supply Chains of Manufacturing Companies
Philipp Bremen, Josef Oehmen, Robert Alard, Paul Schönsleben
Outsourcing has advanced to an important measure that is
applied broadly in operations management. Nowadays,
suppliers of manufacturing companies do not only
provide direct material like raw material and operational
supplements but offer components and advanced modules
incurring many value-adding stages. Whereas in the past
companies built up local supplier networks, they recently
tend to search for global sources. However, not all
companies reach their expectations towards the success of
global sourcing projects. Important reasons for relocating
manufacturing capacities back to local suppliers or in-
house manufacturing are costs for unexpected
coordination activities, limited flexibility and declined or
fluctuating quality. The theory of Transaction Cost
Economics postulates that transaction costs of the types
information, communication and coordination determine
the governance structure of a supply chain, i.e. market,
hybrid or firm. The objective of this paper is to analyze
the cause-and-effect chain of inter-firm transaction costs
concerning global sourcing. The resulting qualitative
model is based on explorative multiple-case study. Full Text
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