Three Essays on Theorizing Supply Chain-Make Versus Supply Chain-Buy

The dissertation aims to provide a new perspective on the management of multi-tier supply chains. When a firm decides to buy a product from a supplier, the buying firm also needs to decide whether to use the supplier to make the lower-tier sourcing decisions or to make those decisions in-house. I call the former "supply chain-buy" and the latter "supply chain-make." If the choice is supply chain-buy, the buying firm releases sourcing control of its bill of materials (BOM) to the top-tier supplier and this supplier, then engages with the supply base to determine the BOM's supply chain. If the choice is supply chain-make, the buying firm maintains sourcing control of the BOM and engages with its own supply base to select the lower-tier suppliers. The dissertation provides a theoretical foundation and empirical observations for understanding the supply chain make-buy decisions. The dissertation consists of three main chapters: Chapter 2 extends the make-or-buy literature into the multi-tier supply management context to provide theoretical reasons for engaging in supply chain-make as opposed to supply chain-buy. Building on transaction cost economics, the knowledge-based view, and structural hole theory, Chapter 2 explains the phenomenon that cannot be fully explained by a single-theoretic perspective. Chapter 3 empirically investigates the economic and behavioral factors that influence individual purchasing managers' supply chain make-buy decision-making. Specifically, the roles of behavioral uncertainty, interpersonal trust, and familiarity are considered. A scenario-based behavioral experiment involving the members of the Institute for Supply Management is employed. Lastly, Chapter 4 studies the performance implications of particular supply network structures influenced by supply chain make-buy decisions. Supply chain make-buy decisions can affect the prevalence of structural holes in supply networks. Chapter 4 investigates the different types of structural holes in supply networks. It provides a novel way of understanding structural holes in the supply network context by distinguishing structural holes between the focal firm's suppliers (horizontal structural holes) from those between its customers and suppliers (vertical structural holes). Panel data on supply networks and firm financial indicators are used for analysis in Chapter 4.