Strategic management of international subcontracting

A transaction cost perspective

Yue Wang*

*Corresponding author for this work

Research output: Contribution to journalArticle

1 Citation (Scopus)


Research on international subcontracting has been policy-oriented and industry-focused. There is a lack of understanding of the phenomenon from strategic management and international business perspectives. This article conceptualizes international subcontracting as a type of relational contract formed by buyers and suppliers from different countries, aiming to facilitate the sourcing of products or components with buyer-specific requirements. It builds a transaction cost model for studying the strategic choice of international subcontracting as an intermediate governance structure, sitting between arm's length outsourcing arrangement and vertically integrated multinational enterprises (MNEs). A set of propositions are developed to aid future empirical research and to provide managers with some guidelines for organizing supply chain across borders. The model also allows managers to examine the complex nature of a range of subcontracting relationships and identify the specific mechanisms that can be used to preserve and manage the dyadic principal-subcontractor exchanges.

Original languageEnglish
Pages (from-to)21-32
Number of pages12
JournalInternational Journal of Information Systems and Supply Chain Management
Issue number3
Publication statusPublished - Jul 2008
Externally publishedYes

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