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.

While agency problems inevitably exist in buyer-supplier relationships, the focus on how to overcome such problems has been confined to the buyer-supplier dyad as if the dyad exists in isolation. In this dissertation, I re-frame the agency problems beyond the dyadic relationship between a buyer and its supplier and suggest a new way to overcome agency problems. While the current Agency Theory suggests that the buyer can monitor and provide incentives to mitigate the agency problems, I propose to look beyond the dyad in addressing buyer-supplier agency problems.

In the first chapter, I examine the impact of the “indirect links” in which the buyer is connected to the supplier through a third actor. I propose a conceptual framework that specifies how the indirect links can overcome agency problems through the effects of information exchange, mutual monitoring, power change, and network governance. These different effects are enabled by the indirect links based on the different network positions and levels of connectivity of the third actor. The first chapter provides a theoretical framework for Chapter 2 and 3.

In Chapter 2, the effect of network governance enabled by the indirect links is investigated. In particular, two scenario-based role-play experiments were conducted with managers to examine the effects of dyadic and network governance mechanisms on supplier opportunism. In Study 1, the participants took the perspective of a supplier, while in Study 2, the participants took the role of a buyer. The results show that network governance mechanism reduces the supplier's opportunistic behavioral intentions directly and indirectly through the negative affection prediction, and while suppliers may overlook the buyer's reactions as they make decisions, the buyers are likely to react against the supplier, such as engage in negative word-of-mouth or reduce level of commitment.

Finally, directed sourcing, a direct application of how a buyer could overcome agency problems beyond the dyad, is examined in Chapter 3. Directed sourcing is an emerging sourcing practice in which the buying firms bypass the top-tier suppliers and directly manage or contract with lower-tier suppliers, and research on this new practice is in its infancy. Therefore, multi-tier multi-task principal-agent models are developed to investigate the effect of directed sourcing practice on each member in this three-tier supply chain, comparing with traditional tiered sourcing. The results show that directed sourcing generally benefits the original equipment manufacturer (OEM) and the lower-tier supplier, while it harms the top-tier supplier. Yet, directed sourcing is not always beneficial to the OEM. Therefore, an OEM should be selective in implementing this new strategy.

Services outsourcing is a prevalent yet problematic phenomenon. On the one hand, more and more firms are outsourcing services function. On the other hand, we are faced with many services outsourcing failures. This research attempts to uncover some of the omitted causes of services outsourcing failure. It extends a conceptual paper that used social network theory to examine the shifting of the triadic relationship structures among the service buyer, service supplier and the buyer's customers at different stages of the services outsourcing arrangements and its performance implications. This study empirically examines these performance implications. Specifically, this research defines the concept of bridge transfer, which denotes the weakening and dissolution of operational ties between the service buyer firms' and their end customers and the appearing and strengthening of operational ties between the service supplier firms and the end customers. It also empirically derives a measurement scale for this new construct. Further, the effects of bridge transfer on supplier's appropriation behavior, buyer's cost of quality and end customers' quality perception are examined in the context of customer facing services and are contrasted with those entail little or no customer interactions. In addition, the moderating roles of buyer-supplier relationship on the effects of bridge transfer are also examined. An Internet-based survey was administered to firms affiliated with CAPS Research and the Institute of Supply Management as the primary data source (n=137). Principal Component Analyses were used to derive a composite score for each of the model construct. Then linear regressions were used to detect the effects of bridge transfer on services outsourcing outcomes and to detect the moderating role of buyer-supplier relationships on these effects. The results show that bridge transfer is positively correlated to suppliers' appropriate behavior and negatively correlated to end customer's quality perception in the context of customer facing services. The effects of bridge transfer are not found for services that entail little or no interactions with the end customers. Instead, buyer-supplier relationship is found to be a key influencing factor to services outsourcing outcomes in this context. This study helps to pinpoint some of the omitted causes of services outsourcing failures and shed light on how to manage services outsourcing for success.