SOURCING STRATEGY ACROSS PRODUCT LIFE CYCLESTAGES: RELEVANCE OF MULTIPLE-MODE GOVERNANCE

Abstract

Although researchers have used multiple organisation theories such as transaction cost theory (TCT), resource-based view (RBV), social exchange theory (SET) and resource dependence theory (RDT) to understand governance mechanisms used in sourcing, our understanding of the effectiveness of various sourcing governance mechanisms in a dynamic business context have been inadequate. This is partly because the 'contextual dynamics' has not been kept in perspective while utilising different theories in studies concerning various governance mechanisms. Inadequate consideration of the contextual dynamics has affected the ability to decide the right governance mechanisms over time. As a remedy, we delineate a conceptual framework that considers simultaneous use of multiple modes of governance and their adjustment over time to match the dynamic business contingencies. We incorporate the product life cycle (PLC) framework in characterising the 'contextual dynamics' of sourcing and use of TCT, RBV, SET and RDT tenets to argue that use of 'multiple-modes' of governance can be effective in addressing evolving sourcing needs over time. Our study contributes to theory development by explaining the whys, how and when of 'multiple-modes' governance over time. Managerial implications, limitations and future research opportunities are also discussed.