The Long-Term Irrelevance of Trust in Outsourcing Decisions for New Technologies: Insights from an Agent-Based Model

Perrons, Robert K. (2005) The Long-Term Irrelevance of Trust in Outsourcing Decisions for New Technologies: Insights from an Agent-Based Model. Supply Chain Forum: an International Journal, 6(11), pp. 30-37.

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Significant empirical data from the fields of management and business strategy suggest that it is a good idea for a company to make in-house the components and processes underpinning a new technology. Other evidence suggests exactly the opposite, saying that firms would be better off buying components and processes from outside suppliers. One possible explanation for this lack of convergence is that earlier research in this area has overlooked two important aspects of the problem: reputation and trust. To gain insight into how these variables may impact make-buy decisions throughout the innovation process, the Sporas algorithm for measuring reputation was added to an existing agent-based model of how firms interact with each other throughout the development of new technologies. The model�s results suggest that reputation and trust do not play a significant role in the long-term fortunes of an individual firm as it contends with technological change in the marketplace. Accordingly, this model serves as a cue for management researchers to investigate more thoroughly the temporal limitations and contingencies that determine how the trust between firms may affect the R&D process.

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ID Code: 46475
Item Type: Journal Article
Refereed: Yes
Keywords: Agent-Based Model , Make or Buy Decision, R&D process , Reputation, Sporas , Technology Outsourcing , Trust
ISSN: 1625-8312
Subjects: Australian and New Zealand Standard Research Classification > COMMERCE MANAGEMENT TOURISM AND SERVICES (150000) > BUSINESS AND MANAGEMENT (150300)
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Management
Copyright Owner: Bordeaux Business School
Copyright Statement: Copyright© 2005 Bordeaux Business School
Deposited On: 13 Oct 2011 06:54
Last Modified: 13 Oct 2011 06:54

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