

Economics Nobel winner’s work ties into Boeing 787 woes


Oliver Williamson (Photo by Justin Sullivan/Getty Images)

University of California, Berkeley economist Oliver Williamson just won the Nobel Prize in economics for explaining why corporations make some decisions more efficiently in house rather than by outsourcing to markets.

That’s a lesson Boeing is learning the hard way with its troubled 787 Dreamliner program, one of his former colleagues told The Wall Street Journal.

Economist Steve Tadelis at the University of California, Berkeley’s Haas School of Business, who has worked with Mr. Williamson, cited the 787 Dreamliner being developed by Boeing Co. as an example of how firms can be more efficient than the marketplace. Boeing, which previously designed and built planes in-house, outsourced much of the Dreamliner’s manufacturing. But because it had less control over its supply line, Boeing couldn’t adapt as quickly and flexibly to the changes and problems that invariably arose within a project as complex as the Dreamliner. Boeing has since taken much of the Dreamliner’s production back in-house.

Categories: 787 Dreamliner
Aubrey Cohen

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