Fit and Misfit of Plural Sourcing Strategies and IT-Enabled Process Integration Capabilities: Consequences of Firm Performance in the U.S. Electric Utility Industry1
Authors: Rai, Arun; Arikan, Ilgaz; Pye, Jessica; Tiwana, Amrit
Journal: MIS Quarterly (2015)
DOI: 10.25300/misq/2015/39.4.6
Recent work has shown that a firm’s plural sourcing strategy, which determines how much it chooses to make versus how much it chooses to buy, requires consideration of the complementarities and constraints that affect the differential advantages of making and buying. Elaborating on this perspective, we theorize how (mis)fit between a firm’s plural sourcing strategy of simultaneously making and buying and its development of information technology (IT) enabled interfirm and intrafirm process integration capabilities influences firm performance in deregulated markets. We position our theory development and empirical tests in the context of the power-generation segment of the U.S. electric utility industry (EUI), an asset-intensive industry that has been deregulated to promote the separation of key value chain activities (i.e., generation, transmission, and distribution) and the development of wholesale energy markets. We draw on the transaction cost economics, coordination costs, and IT capabilities perspectives to theorize that a firm achieves fit (realizing performance benefits) by increasing market sourcing intensity (MSI)—or, how much it buys relative to how much it makes—and dev…