|Title: ||Make-buy decisions in the face of radical innovations.|
|Authors: ||Perrons, Robert Kirby|
|Issue Date: ||26-Oct-2004|
|Abstract: ||Some research 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 lack of convergence points to the fact that the scheme of categorization used to
analyze make-buy decisions in the face of radical innovations is not yet complete. Accordingly,
this thesis builds upon prior work on make-buy decisions and disruptive technologies, and
constructs two new hypotheses by introducing evidence from research in the areas of (1) supplier
relationships and (2) industry clockspeed.
Using a three-phase research design involving both case studies and a survey, this research shows
that close relationships between customer firms and principal suppliers that are built on trust and
personal relationships do not play an important long-term role in the development of radical
innovations. Thus, while previous research in this area underlines the value of these relationships
during the day-to-day operations of a business, this evidence draws into question whether they are
helpful in the face of a radical innovation.
The results also show that an industry’s clockspeed has no significant bearing on the success or
failure of any particular make-buy strategy for a radical innovation. Because many of the
prescriptive frameworks and strategic formulas put forward in the literature for make-buy
decisions involving radical innovations are based on observations from fast clockspeed industries,
this conclusion effectively broadens the potential applicability of prior research in this area.|
|Appears in Collections:||Theses - Department of Engineering|
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