Make-or-buy decisions on technology-intensive products

insights from the consumer goods industry

Alexander Brem*, Robert Elsner

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

Make-or-buy decisions on technology-intensive components represent a key task in the management of technologies. Against this background, this paper presents an analysis of a technology company which gave key insights into their make-or-buy decisions on the strategic and operative level. The results show two kinds of make-or-buy decisions, called type 1 and type 2. In contrast to type 1 make-or-buy decisions whose scope is mostly limited to the production and quality function, type 2 decisions are strongly linked to engineering and R&D activities. Moreover, two new decision matrices are introduced: a ‘product/subsystem aggregation’ scheme and a ‘make-or-buy controlling’ matrix. In an environment in which companies move towards greater use of outsourcing, the framework ensures that company strategy and core competencies are followed in the long run despite short-range deviations of make-or-buy analysis results. These findings might be helpful and suitable to other manufacturing companies that deal with technology-intensive components on a strategic and operative level.

Original languageEnglish
Article number1850046
JournalInternational Journal of Innovation Management
Volume 22
Issue number6
Number of pages17
ISSN1363-9196
DOIs
Publication statusPublished - 2018

Fingerprint

Industry
Outsourcing
Agglomeration
Make or buy decisions
Make-or-buy
Manufacturing companies
Core competencies
Subsystem
Deviation
Management of technology

Keywords

  • innovation
  • insourcing
  • Make-or-buy
  • outsourcing
  • R&D management
  • technology management
  • technology-oriented companies

Cite this

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title = "Make-or-buy decisions on technology-intensive products: insights from the consumer goods industry",
abstract = "Make-or-buy decisions on technology-intensive components represent a key task in the management of technologies. Against this background, this paper presents an analysis of a technology company which gave key insights into their make-or-buy decisions on the strategic and operative level. The results show two kinds of make-or-buy decisions, called type 1 and type 2. In contrast to type 1 make-or-buy decisions whose scope is mostly limited to the production and quality function, type 2 decisions are strongly linked to engineering and R&D activities. Moreover, two new decision matrices are introduced: a ‘product/subsystem aggregation’ scheme and a ‘make-or-buy controlling’ matrix. In an environment in which companies move towards greater use of outsourcing, the framework ensures that company strategy and core competencies are followed in the long run despite short-range deviations of make-or-buy analysis results. These findings might be helpful and suitable to other manufacturing companies that deal with technology-intensive components on a strategic and operative level.",
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Make-or-buy decisions on technology-intensive products : insights from the consumer goods industry. / Brem, Alexander; Elsner, Robert.

In: International Journal of Innovation Management, Vol. 22, No. 6, 1850046, 2018.

Research output: Contribution to journalJournal articleResearchpeer-review

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T2 - insights from the consumer goods industry

AU - Brem, Alexander

AU - Elsner, Robert

PY - 2018

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AB - Make-or-buy decisions on technology-intensive components represent a key task in the management of technologies. Against this background, this paper presents an analysis of a technology company which gave key insights into their make-or-buy decisions on the strategic and operative level. The results show two kinds of make-or-buy decisions, called type 1 and type 2. In contrast to type 1 make-or-buy decisions whose scope is mostly limited to the production and quality function, type 2 decisions are strongly linked to engineering and R&D activities. Moreover, two new decision matrices are introduced: a ‘product/subsystem aggregation’ scheme and a ‘make-or-buy controlling’ matrix. In an environment in which companies move towards greater use of outsourcing, the framework ensures that company strategy and core competencies are followed in the long run despite short-range deviations of make-or-buy analysis results. These findings might be helpful and suitable to other manufacturing companies that deal with technology-intensive components on a strategic and operative level.

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