Strategies for Intrafirm Transfers and Outside Sourcing

Abstract

In this article the author discusses research she carried out that examined the vertical integration strategies for corporations. She notes that the internal purchasing strategies for companies vary in a pattern that is related to competitive conditions and corporate climates. She believes that firms are more likely to undertake a greater amount of intrafirm transfers within settings of competitive stability and low demand uncertainty and that firms that make many internal transfers under other conditions do so because they lack the bargaining power needed to encourage suppliers and distributors to assume the risk they hoped to avoid or because vertical integration fits the strategy needs of their parent company.