To Transfer or Not? Analysis of the Original Equipment Manufacturer's Strategic Outsourcing Strategy in the Presence of the Supplier's Innovation Effort
研究了原始设备制造商在面临传统供应商创新努力时，是否应将生产转移到成本更低但产量不确定的新兴地区，发现品牌价值大时转移意愿低，且竞争供应商的存在并不总是促使转移。
Recently, a new trend has arisen in which many original equipment manufacturers (OEMs) outsourced to traditional low-cost manufacturing bases (e.g., China) have started to transfer production to new emerging regions with even lower costs (e.g., Southeast Asia). However, it is still unclear whether and when OEMs should transfer to the new environment, especially when taking the traditional supplier's initial innovation effort into consideration. To address this question, we consider a sourcing game where one OEM sources from a traditional low-cost supplier that can be either competitive (CS) or noncompetitive (NS) initially. Moreover, both of these types of suppliers have the ability to innovate by themselves. Driven by the increasing cost pressure, the OEM may transfer to a new supplier (LS) that has an even lower cost but suffers yield uncertainty. The equilibrium results show that the OEM is less likely to transfer when its brand value is large enough. Interestingly, we find that the competition between the CS and OEM does not always prompt the OEM to transfer. When the brand advantage is large enough and the traditional supplier's unit production cost for the OEM is moderate, the OEM should not transfer under the CS scenario but should transfer under the NS scenario. Finally, we find that when the OEM's brand advantage increases, the effectiveness of innovation in preventing the OEM from transferring decreases under the CS scenario, while it increases under the NS scenario.