Munich Personal RePEc Archive

Strategic delegation in procurement

Alonso-Pauli, Eduard and Bru, Lluís (2018): Strategic delegation in procurement.


Download (470kB) | Preview


In a firm organized into business units, we show when profitability increases if procurement is delegated to the division in charge of production. We highlight that our results are driven by the business unit having a different objective function than Headquarters. The profitability of procurement delegation is affected by the essentiality of production facilities to the activities of the firm, and by strategic distortions in both transfer and input prices. We also look at vertical separation of activities as an alternative to procurement delegation.

Logo of the University Library LMU Munich
MPRA is a RePEc service hosted by
the University Library LMU Munich in Germany.