Document Type


Publication Title

Brigham Young University Law Review

Publication Date


Page Number



modularity, outsourcing, contracting out


Business Organizations Law | Contracts | Law


Firms have increasingly moved productive activities from within to outside the firm through outsourcing arrangements. According to some estimates, the value of outsourcing contracts has been nearly 100 billion dollars per year since 2004. Firm outsourcing happens for a number of reasons, including to save labor costs, capture the benefits of regulatory arbitrage, and take advantage of economies of scale in the provision of firm needs. We review a number of outsourcing contracts for evidence that contract techniques are used to help modularize the relationship between the firm and its service provider. Consistent with what modularity theory might predict, some contract terms seem to work to thin the interactions between the firm and its service provider, and this thinning serves to make contracting for otherwise intrafirm services more feasible. Other contract terms serve to help the parties manage the fact that inevitably their relationship will be thick with interactions



To view the content in your browser, please download Adobe Reader or, alternately,
you may Download the file to your hard drive.

NOTE: The latest versions of Adobe Reader do not support viewing PDF files within Firefox on Mac OS and if you are using a modern (Intel) Mac, there is no official plugin for viewing PDF files within the browser window.