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Make-buy decisions in the face of technological change: does industry clockspeed matter?

Make-buy decisions in the face of technological change: does industry clockspeed matter? Some evidence in the area of make-buy decisions for new technologies suggests that it is a good idea for a company to pursue a fairly rigorous "make" policy in the early days of a potentially disruptive innovation. Other studies prescribe exactly the opposite, promoting instead a "buy" strategy. This paper seeks to bridge the gap between these perspectives by suggesting that both strategies are valid, but that they are most successfully applied in different market environments. The "make" prescription may be more suited to either extremely fast or extremely slow rates of technological change, while a "buy" strategy might be more appropriate in market sectors where technologies evolve at a medium pace. This paper highlights the importance of industry clockspeed and supplier relationships in make-buy decisions for new technologies, and puts forward two new hypotheses that require empirical testing. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Management and Enterprise Development Inderscience Publishers

Make-buy decisions in the face of technological change: does industry clockspeed matter?

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Publisher
Inderscience Publishers
Copyright
Copyright © Inderscience Enterprises Ltd. All rights reserved
ISSN
1468-4330
eISSN
1741-8127
Publisher site
See Article on Publisher Site

Abstract

Some evidence in the area of make-buy decisions for new technologies suggests that it is a good idea for a company to pursue a fairly rigorous "make" policy in the early days of a potentially disruptive innovation. Other studies prescribe exactly the opposite, promoting instead a "buy" strategy. This paper seeks to bridge the gap between these perspectives by suggesting that both strategies are valid, but that they are most successfully applied in different market environments. The "make" prescription may be more suited to either extremely fast or extremely slow rates of technological change, while a "buy" strategy might be more appropriate in market sectors where technologies evolve at a medium pace. This paper highlights the importance of industry clockspeed and supplier relationships in make-buy decisions for new technologies, and puts forward two new hypotheses that require empirical testing.

Journal

International Journal of Management and Enterprise DevelopmentInderscience Publishers

Published: Jan 1, 2005

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