Valuate outsourcing contracts from vendors' perspective: A real options approach

Bin Jiang, Tao Yao, Baichun Feng

Research output: Contribution to journalArticle

39 Scopus citations

Abstract

To date, most applications of real options theory (ROT) in outsourcing literature are modeled from the clients' side. Little attention has been paid to vendors' options in outsourcing. In this article, we study outsourcing from the vendors' perspective by analyzing vendors' value of waiting. The contribution of our research to the literature lies in our analysis of a model that compensates for vendors' loss of option to wait since they have to exercise outsourcing contracts at clients' given timing. Such a compensation-oriented model yields new insights about the vendors' valuation of outsourcing opportunities, and offers important practical guidance to vendors' decision making.

Original languageEnglish (US)
Pages (from-to)383-405
Number of pages23
JournalDecision Sciences
Volume39
Issue number3
DOIs
StatePublished - Aug 1 2008

All Science Journal Classification (ASJC) codes

  • Business, Management and Accounting(all)
  • Strategy and Management
  • Information Systems and Management
  • Management of Technology and Innovation

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