Title: In-house production versus specific forms of supplier governance: testing predictions of the global value chains model
Authors: Alexander Schmitt; Johannes Van Biesebroeck
Addresses: Department of Economics, University of Leuven (KU Leuven), Naamsestraat 69, 3000 Leuven, Belgium ' Department of Economics, University of Leuven (KU Leuven), Naamsestraat 69, 3000 Leuven, Belgium
Abstract: Carmakers interact in their supply chain with virtually all manufacturing industries. Using a novel dataset on sourcing transactions that contains links between buyers and suppliers for sourcing contracts of individual components, we show that multiple forms of relationship governance can coexist within a single industry. We first show that three characteristics of transactions that have been used to rationalise observed sourcing patterns in the global value chains (GVC) literature - complexity, codifiability and supplier capability - also predict whether components are outsourced or not. More importantly, the same characteristics help explain how carmakers choose to structure supply relationships differently depending on the situation.
Keywords: global value chains; GVC; outsourcing; supply relationships; in-house production; supplier governance; automotive supply chains; automobile industry; supply chain management; SCM; sourcing patterns; complexity; codifiability; supplier capability.
International Journal of Automotive Technology and Management, 2017 Vol.17 No.1, pp.26 - 50
Received: 05 May 2016
Accepted: 19 Sep 2016
Published online: 14 Feb 2017 *