BOT Outsourcing Contracts: Boon or Bane to Emerging Market Vendor Firms?

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    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.
    Original languageEnglish
    Title of host publicationProceedings of the 54rd Annual Meeting of the Academy of International Business
    EditorsSusan Feinberg, Tunga Kiyak
    Place of PublicationEast Lansing, MI
    PublisherAcademy of International Business
    Publication date2012
    Pages206
    Publication statusPublished - 2012
    EventAIB 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 20123 Jul 2012
    Conference number: 54
    http://aib.msu.edu/events/2012/

    Conference

    ConferenceAIB 2012 Annual Meeting
    Number54
    LocationGeorge Washington University and University of Maryland
    CountryUnited States
    CityWashington
    Period30/06/201203/07/2012
    Internet address
    SeriesAcademy of International Business. Annual Meeting. Proceedings
    Volume54
    ISSN2078-4430

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