Strategic choices: Accelerated startups' outsourcing decisions

Abstract

By integrating transaction costs, the resource-based view, and institutional theories, this study illuminates the relevance of contracting capabilities and institutional distance in shaping insourcing versus outsourcing decisions. Combining different data sources, we create a panel that includes 405 startup-accelerator meetings held by 261 domestic and foreign startups participating in an international acceleration program. We learn that institutional distance and contracting capabilities shape the assessment between transaction and bureaucratic costs for a startup. Interestingly, we find that startup growth decisions differ between international and domestic startups. Our findings suggest that beyond considerations at the transaction level of analysis, firm and country-level characteristics are relevant predictors of governance decisions, and that capabilities and institutions deserve additional consideration in the study of firms' strategic choices related to growth.