Make-or-buy decisions and the manipulability of performance measures

Arbeitspapier

The make-or-buy decision is analyzed in a simple framework combining contractual incompleteness with the existence of imperfect but contractible performance measures. Contractual incompleteness gives rise to two regimes, identified with make and buy. The performance measure on which comprehensive contracts can be written is imperfect in the sense of being subject to manipulation. The main result is that the impact – or "externality" – of manipulation on true performance is key; a positive (negative) such externality favors make (buy).

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 2009:16

Classification and Topics

• Classification: Wirtschaft ; Organizational Behavior; Transaction Costs; Property Rights ; Firm Organization and Market Structure ; Contracting Out; Joint Ventures; Technology Licensing
• Subject: make-or-buy decision ; manipulation ; outsourcing

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Andersson, Fredrik N. G.
• Event: Veröffentlichung
• (who): Lund University, School of Economics and Management, Department of Economics
• (where): Lund
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/259975
• Last update: 10.03.2025, 11:44 AM CET