Abstract
Build-operate-transfer (BOT) contracting has been widely usen in the engineering and construction industry, but has only recently been introduced in services industry domains. Notably, service provider firms from emerging
markets have recently started offering BOT outsourcing contracts. In this paper we investigate under which circumstances a BOT outsourcing contract (i.e. a contract where the client firm exercises its call option) is beneficial, or the opposite, to the emerging market vendor firm. We draw on various theoretical literatures (transaction cost economics, real options, inter-firm linkages) and develop three scenarios for the implications for vendor firms. We find that BOT contracts, under certain circumstances, may imply benefits of process and
knowledge upgrading for the emerging market vendor firm. However, given different sets of circumstances, engaging in a BOT contract carries important competitive risks for the vendor firm, in terms of a gradual downgrading of the vendor firm's role in the collaboration with clients, and the ensuing hollowing out of knowledge competences.
markets have recently started offering BOT outsourcing contracts. In this paper we investigate under which circumstances a BOT outsourcing contract (i.e. a contract where the client firm exercises its call option) is beneficial, or the opposite, to the emerging market vendor firm. We draw on various theoretical literatures (transaction cost economics, real options, inter-firm linkages) and develop three scenarios for the implications for vendor firms. We find that BOT contracts, under certain circumstances, may imply benefits of process and
knowledge upgrading for the emerging market vendor firm. However, given different sets of circumstances, engaging in a BOT contract carries important competitive risks for the vendor firm, in terms of a gradual downgrading of the vendor firm's role in the collaboration with clients, and the ensuing hollowing out of knowledge competences.
| Original language | English |
|---|---|
| Title of host publication | Proceedings of the 54rd Annual Meeting of the Academy of International Business |
| Editors | Susan Feinberg, Tunga Kiyak |
| Place of Publication | East Lansing, MI |
| Publisher | Academy of International Business |
| Publication date | 2012 |
| Pages | 206 |
| Publication status | Published - 2012 |
| Event | AIB 2012 Annual Meeting: Rethinking the Roles of Business, Government and NGOs in the Global Economy - George Washington University and University of Maryland, Washington, United States Duration: 30 Jun 2012 → 3 Jul 2012 Conference number: 54 http://aib.msu.edu/events/2012/ |
Conference
| Conference | AIB 2012 Annual Meeting |
|---|---|
| Number | 54 |
| Location | George Washington University and University of Maryland |
| Country/Territory | United States |
| City | Washington |
| Period | 30/06/2012 → 03/07/2012 |
| Internet address |
| Series | Academy of International Business. Annual Meeting. Proceedings |
|---|---|
| Volume | 54 |
| ISSN | 2078-4430 |