Outsourcing Boosts Profits, Reshapes Industries and Economies Worldwide
The article looks at how companies decide whether to outsource parts of their production or do everything in-house, based on market conditions and production costs. They studied different market setups to see how it affects this decision. The study found that in industries with more buyers than suppliers, it's better for suppliers to outsource if they can save money through bigger production. If suppliers can't save by producing more, it's best for them to do everything internally instead. In cases where suppliers don't save by producing more, it's always better for them to keep things in-house, regardless of the market setup. This was proven using data from German companies from 1992 to 2001.