Title: Concurrent sourcing as a termination safeguard

Authors: Niels Peter Mols; Paula Sarita Bigio Schnaider

Addresses: Department of Economics and Business, Aarhus University, Fuglesangs Allé 4, 8210 Aarhus V, Denmark ' Schoool of Economics, Management and Accounting, University of Sao Paulo, Av. Prof. Luciano Gualberto, 908, 05508-010, Sao Paulo, SP, Brazil

Abstract: This paper discusses the conditions under which concurrent sourcing is an effective safeguard. Relying on the transaction cost and the resource-based theories, we develop a conceptual model to argue that concurrent sourcing shortens the period that a buyer needs in order to internalise production and thus, it shortens the period in which an external supplier is able to hold-up a buyer. Concurrent sourcing also allows for short run expansion of production and reduces costs of lost customers. However, when complementarities and diseconomies of scale make concurrent sourcing an efficient choice for a buyer, the same complementarities and diseconomies of scale also weaken the threat that the internal production unit may replace the external supplier.

Keywords: concurrent sourcing; parallel production; safeguards.

DOI: 10.1504/IJPM.2023.130268

International Journal of Procurement Management, 2023 Vol.17 No.1, pp.138 - 150

Received: 21 Oct 2021
Accepted: 23 Oct 2021
Published online: 14 Apr 2023 *