In an era of intense global competition, firms realize that the effective use of global sourcing contributes significantly to their market performance. Increasingly, successful firms use a higher level of strategic alliance–based global sourcing for major components by cooperating with their suppliers, even when highly specific assets are involved. This phenomenon is contradictory to the recommendation of transaction cost analysis, in which global internal sourcing should be used by firms when asset specificity is involved. Through the integration of different perspectives, the author examines variables that may influence buyer firms to rely more on strategic alliance–based global sourcing for major components when highly specific assets are involved. In addition, the author suggests that strategic alliance–based global sourcing when highly specific assets are deployed may enhance a firm's competitive advantage through the combination of resources in unique ways. This article is intended to increase managers' awareness of the strategic benefits that arise from outsourcing through partnerships with their suppliers.
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