Supply Chain Governance: A Case of Cross Dock Management in the Automotive Industry

This research examines the ability of transaction cost economics and resource-based view constructs to explain a firm's decision to either develop a service capability internally or purchase the same service externally. This research objective is accomplished via the examination of two case studies that demonstrate two contrasting approaches to the provision of cross dock services in the automotive industry. The results of the research provide evidence that the firm boundary decision is sensitive to personal management perceptions of the underlying service, and thus, can be influenced as much by decidedly subjective criteria (e.g., a manager's view of the service as "a mere commodity" versus "strategically important") as by market realities or the more objective criteria implied by the constructs embodied in transaction cost economics and the resource-based view of the firm. Further, the research reveals the inconsistencies that can sometimes exist between the formal and informal integration mechanisms employed by a firm.