Supplier Switching and Outsourcing
We examine supplier switching decisions using a unique database that tracks firms (credit
unions) and their suppliers (data processing vendors); the data are in a panel, allowing us
to track supplier switching decisions at a new level of detail. We focus on two sets of
relationships. First, we estimate a model that relates supplier choices and switching to a
variety of buyer- and supplier-specific characteristics. Second, we examine how
switching depends on the vendor relationships that credit unions choose: one is a partial
form of outsourcing while the other is more complete. This allows us to estimate how
supplier switching interacts with organizational form.
