THE PSYCHOLOGICAL DESIGN OF FIRM BOUNDARIES: PREEMPTING ESCALATING COMMITMENT THROUGH BUY VS. MAKE

• 成果类型: Article
• 署名作者: Keum, D. Daniel
• 署名单位: Columbia University
• 刊物名称: ACADEMY OF MANAGEMENT JOURNAL
• ISSN/ISSBN: 0001-4273
• DOI: 10.5465/amj.2022.0730
• 发表日期: 2025
• 页码: 436-463
• 关键词: TRANSACTION COST ECONOMICS; vertical integration; MANAGEMENT-RESEARCH; decision-making; governance; capabilities; SUPPLIER; determinants; performance; KNOWLEDGE

摘要

Strong ownership of the product development process, while facilitating the generation of new products, can exacerbate escalating commitment and impede timely termination. We examine how managers, with foresight, use buy vs. make decisions to create psychological and organizational distance from a product and preempt escalating commitment. Using detailed product-level data from the fashion industry and its unique features, we show that managers contract manufacture risky products even when they can be readily manufactured in-house, especially core products that are central to a firm's identity and hence more prone to escalating commitment. Our findings highlight cognitive bias as a source of internal transaction cost and bring its preemption to the forefront of buy vs. make decisions. Our study develops a cognitive foundation for transaction cost theory that does not depend on opportunism or asset specificity and highlights the psychological designing of firm boundaries as a strategy for improving the decision environment.