“Concurrent sourcing” is a term used by Parmigiani to describe the phenomenon where a firm simultaneously buys and makes the same good or service. The purpose of this paper is to develop propositions that suggest how concurrent sourcing affects performance.
Based on transaction cost, agency, neoclassical economic, knowledge‐based, and resource‐based theory, it is proposed to show how concurrent sourcing affects performance.
The paper argues that concurrent sourcing improves performance when firms face a combination of volume uncertainty, technological uncertainty, performance uncertainty, non‐decomposability, transaction‐specific investments, and strong internal and external capabilities.
The paper maps the relationships between concurrent sourcing and performance and discusses how these relationships can be modelled. The propositions and discussion offer researchers a starting‐point for further research.
The propositions that are developed suggest that managers should consider using concurrent sourcing when they face problems caused by volume uncertainty, technological uncertainty, performance uncertainty, non‐decomposability, and asset specificity. Concurrent sourcing can also be a way to exploit both strong internal capabilities and external suppliers' strong capabilities.
The main contribution is a number of propositions, explanations, and discussions regarding how concurrent sourcing affects performance of the market and the hierarchy.
