Manufacturing

Outsourcing in the wood product manufacturing sector : a by Daniel Nordigarden.

By Daniel Nordigarden.

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Sample text

Opportunism becomes difficult to handle and creates uncertainty in the economic transaction (Williamson, 1985). This is especially a hazard when there are only a small number of available contracting partners (Williamson, 1975, p. 26). When there are only few available suppliers and hence low competition, there is an increased risk that suppliers will act opportunistically. Together with bounded rationality, this would increase the uncertainty and increase the hazards in the contracting process.

Another finding is that the outsourcing decision can be analysed on different levels and in this section the outsourcing decision will be addressed on three related levels: (1) activity, (2) technology and (3) component. Thus, the main difference for the outsourcing decision lays in the choice of the unit of analysis of the developed frameworks. In addition, risks related with outsourcing will be addressed. g. , 1997; McIvor, 2005). , 2005). The main factor for deciding what to outsource is the notion of core competence.

21; 1990). Because of bounded rationality“…all complex contracts are unavoidably incomplete… given opportunism, contract-as-promise unsupported by credible commitments is hopelessly naive” (Williamson, 1990, p. 12). At best, incomplete contracts are established. ƒ Opportunism occurs because humans are self-interest seekers with guile, which is seldom transparent ex ante, and is an important consideration when choosing a suitable contractual relationship (Williamson, 1979; 1985). Opportunism becomes difficult to handle and creates uncertainty in the economic transaction (Williamson, 1985).

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