ABSTRACT
This study explores how initial control choice influences the ease with which outsourcing firms switch suppliers. We recognize that firms invest in controls to manage collaborative relationships, and argue that these investments generate switching costs, namely, opportunity and reinvestment costs. We collect data on outsourcing transactions by conducting semi-structured interviews across multiple field sites. Observed patterns across 53 cases show that firms with trust-based controls experience the most difficulty in switching suppliers, whereas firms with market-based controls experience the greatest ease. Firms with bureaucratic-based and hybrid controls generally lie between these extremes. Furthermore, in nearly 50 percent of our sample (25 cases), respondents indicate that the switching costs associated with control choices increase the difficulty of switching suppliers. We also find evidence that the magnitude and nature of switching costs vary with the types of controls chosen.
Data Availability: Data used in this study cannot be made public due to confidentiality agreements with participating firms.
