Making, Buying, and Concurrent Sourcing: Implications for Operating Leverage and Stock Beta

Autor:	Bart M. Lambrecht, João C. A. Teixeira, Grzegorz Pawlina
Rok vydání:	2015
Předmět:	Economics and Econometrics 050208 finance Returns to scale Capital investment 05 social sciences Operating leverage Investment (macroeconomics) Procurement Accounting 0502 economics and business Fixed price Business 050207 economics Fixed cost Beta (finance) Finance Industrial organization
Zdroj:	Review of Finance. 20:1013-1043
ISSN:	1573-692X 1572-3097
DOI:	10.1093/rof/rfv027
Popis:	We present a real options model of a firm’s make-or-buy decision under demand uncertainty. “Making” is subject to decreasing returns to scale, fixed costs, and capital investment. “Buying” happens at a fixed price and requires no investment. Three distinct procurement regimes endogenously arise: buying, making, or concurrent sourcing for, respectively, low, intermediate, and high demand. Capital constraints encourage buying or concurrent sourcing. Operating leverage peaks when the firm switches between buying and making, and it is lowest (and negative) at the switch between making and concurrent sourcing. This non-monotonic pattern mirrors and drives the behavior of the firm’s beta.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_dedup___::324d431a3bd06def6d2b77a27d6290be https://doi.org/10.1093/rof/rfv027 Zobrazit plný text záznamu