Research Economic Seminar: Outsourcing Decisions for Additive Manufacturing

Manufacturing firms have started to implement emerging additive manufacturing (AM) technologies at an industrial scale. With industrial potential comes the challenge for firms to identify appropriate governance structures for AM transactions. Firms are in conflict whether they should outsource AM or pursue it in-house. We investigate why manufacturing firms opt for specific transaction governance structures and develop propositions on how the digital traits and the emerging stage of AM technologies alter established arguments related to governance choice. We apply a multiple-case study approach and analyze interview data from firms in safety-regulated industries with AM applications. Theorizing at the middle range allows us to develop a nuanced understanding of the rationales of manufacturing firms, starting with arguments from transaction cost economics and the resource-based view. We find that many firms strengthen their resource positions to facilitate in-house AM as they feel the need to protect their intellectual property. This strategy is reinforced by the development of core competencies in AM, commitment to internal learning, and enthusiasm for novel AM technologies. We uncover only a few examples of firms that opt for collaborative outsourcing arrangements, which appear to be underestimated in this uncertain market.