4 ms·
Perhaps when the opportunity cost of building is greater than the actual cost of purchasing. This frequently is true when specialization or large scale producti
by iigs 17y ago
Perhaps when the opportunity cost of building is greater than the actual cost of purchasing. This frequently is true when specialization or large scale production makes the producer more efficient than someone who does not have those attributes.
For example, when it's time to eat you buy prepared chicken from a store; you don't spend a few hours every day tending a small coop of chickens and bring one in every week.
A counterpoint to this is companies that are funded with a high valuation. Investors expect to see a return on their investment and don't want to hear "we left the money in the bank while we try to find and hire a person that is capable of building something we could purchase". The seed/self funded case and overcapitalized case both have "have to build" == "get to build", but in one it's 1==1 and in the other it's 0==0.