1. Testing alternative theories of the firm: transaction cost, knowledge‐based, and measurement explanations for make‐or‐buy decisions in information services
Poppo and Zenger (1998)
presented by Yaxian Xie

2. Introduction Research Questions Contributions
Considering competing/alternative explanations based on TCE, KBV and measurement issues, how is boundary choice driven by exchange attributes?
Contributions
Comparative examination
DVs:
Boundary choice
governance performance (methodological difficulty)

3. A Model of Institutional Comparative Performance

4. Determinants of Comparative Performance
Asset specificity
Measurement difficulty
Technological uncertainty
Economies of scale
Magnitude of skill set

6. Method Data Measurement (DVs) Key informant
Sample: 1368 information service exchanges (across 152 companies)
Measurement (DVs)
Exchange Performance (common features across market and firm):
overall cost; quality of output or service; responsiveness to problems or inquiries
Boundary Choice
Percentage of outsourcing
Decision-making process measure

7. Results

8. Results (part)

9. Conclusions Findings Contributions
Support TCE (asset specificity decreases market effectiveness)
Consistent with agency theory and property rights (measurement difficulties decrease internal performance; NOT market performance)
Boundary choices matter (markets and hierarchies possess different capacities with various exchange attributes)
Contributions
Comparative examination of multiple theories