Hirschheim / Heinzl / Dibbern Information Systems Outsourcing

Enduring Themes, New Perspectives and Global Challenges
2. Auflage 2006
ISBN: 978-3-540-34877-1
Verlag: Springer Berlin Heidelberg
Format: PDF
Kopierschutz: 1 - PDF Watermark

E-Book, Englisch, 695 Seiten

Four years have been passed away since the first edition of this book has been published. While certain key issues on IS sourcing like determinants and application service provision have become more mature from an academic and industry perspective, additional topics have arisen on the horizon. In particular, offshoring and business process outsourcing have led to numerous insightful publications which offer a valuable and indispensable holistic sourcing persp- tive. Thus, the second edition of our outsourcing book deals with enduring themes, new perspectives, and global challenges. In addition to classical themes like Sourcing Determinants (Part I), Relationship Aspects (Part II), and Experiences (Part III), we felt it worthwhile to add three new parts. They cover information systems outsourcing from a Vendor and Individual Perspective (Part IV), Application Service Providing (Part V) as well as Offshoring and Global Outsoucing (Part VI). Again we have thoughtfully tried to arrange a compilation of contemporary outsourcing research as a primer and a platform for scientific discourse. In contrast to the first edition, this book is not the outcome of an International Conference, but rather an update of important and relevant perspectives. Since the Third International Conference on Outsourcing of Information Services will take place 2007 in Heidelberg, Germany, it may be considered as an epilogue for further interactions and discussions.

Autoren/Hrsg.

Hirschheim, Rudy

Heinzl, Armin

Dibbern, Jens

Inhaltsverzeichnis

1;Preface;5
2;Contents;6
3;Part I: Overview;10
3.1;Information Technology Outsourcing in the New Economy – An Introduction to the Outsourcing and Offshoring Landscape;11
3.1.1;1 Introduction;11
3.1.2;2 IT Outsourcing Motivation and History;12
3.1.3;3 Offshore Outsourcing;14
3.1.4;4 Motivation for the Second Edition;16
3.1.5;5 Book Structure and Outline;17
3.1.5.1;5.1 Determinants of the IT Outsourcing Decision;19
3.1.5.2;5.2 Arranging and Managing IT Outsourcing Relationships;20
3.1.5.3;5.3 Experiences and Outcome of IT Outsourcing;21
3.1.5.4;5.4 Vendor View and Individual Level Perspective;23
3.1.5.5;5.5 Application Service Providing (ASP) and Business Process Outsourcing ( BPO);24
3.1.5.6;5.6 Offshoring and Global Outsourcing;26
3.1.6;6 Conclusions;27
3.1.7;References;28
4;Part II: Determinants of the IS Outsourcing Decision;32
4.1;Costs, Transaction-Specific Investments and Vendor Dominance of the Marketplace: The Economics of IS Outsourcing1;33
4.1.1;1 Introduction;33
4.1.2;2 Theory Development and Hypotheses;35
4.1.2.1;2.1 Production Economies;35
4.1.2.2;2.2 Transaction Economies;36
4.1.2.3;2.3 Financial Slack;38
4.1.2.4;2.4 Firm Size;40
4.1.2.5;2.5 Firm Performance;40
4.1.3;3 Study Method;41
4.1.3.1;3.1 Sample and Design;41
4.1.3.2;3.2 Test of Non-Response Bias;43
4.1.3.3;3.3 Procedure;44
4.1.3.4;3.4 The Survey Design;44
4.1.3.5;3.5 Archival Data;46
4.1.4;4 Analysis and Results;47
4.1.5;5 Discussion;50
4.1.5.1;5.1 Production and Transaction Economics Findings;50
4.1.5.2;5.2 Financial Slack Findings;51
4.1.5.3;5.3 Firm Size Findings;51
4.1.6;6 Study Limitations;52
4.1.7;7 Conclusion;52
4.1.8;References;53
4.1.9;Appendix A;58
4.1.9.1;Definition and Operationalization of Constructs in the Survey;58
4.2;Selective Outsourcing of Information Systems in Small and Medium Sized Enterprises;62
4.2.1;1 Introduction;62
4.2.2;2 Theoretical Framework;64
4.2.2.1;2.1 Transaction Cost Theory;65
4.2.2.2;2.2 Resource-based Theory;66
4.2.2.3;2.3 Power Theory;68
4.2.3;3 Research Methodology;69
4.2.3.1;3.1 Data;69
4.2.3.2;3.2 Measures;69
4.2.3.3;3.3 Partial Least Squares Analysis;71
4.2.4;4 Empirical Results;72
4.2.4.1;4.1 Descriptive Statistics;72
4.2.4.2;4.2 Findings from Model Testing;73
4.2.5;5 Discussion;75
4.2.6;6 Summary and Outlook;78
4.2.7;References;80
4.2.8;Appendix;84
4.2.8.1;Survey Items for Scales used in PLS Analysis (translated from German);84
4.2.8.2;Measurement Reliability;86
4.3;Antecedents of Information Systems Backsourcing;87
4.3.1;1 Backsourcing Phenomenon;87
4.3.2;2 IS Backsourcing vs. IS Outsourcing;89
4.3.3;3 Backsourcing Framework;92
4.3.4;4 Economic Considerations;93
4.3.5;5 Economic Considerations: Illustration;95
4.3.6;6 Strategic Considerations;96
4.3.7;7 Strategic Considerations: Illustration;97
4.3.8;8 Relationship Considerations;98
4.3.9;9 Relationship Considerations: Illustration;99
4.3.10;10 Triangulation of Factors;100
4.3.11;11 Multiple Factor Considerations: Illustration;100
4.3.12;12 Conclusion;101
4.3.13;References;103
4.4;IT Sourcing a Dynamic Phenomena: Forming an Institutional Theory Perspective;107
4.4.1;1 Introduction;107
4.4.1.1;1.1 Motivation;107
4.4.1.2;1.2 Organizational Change in IS Research;108
4.4.1.3;1.3 The Theoretical Perspective;109
4.4.2;2 Outsourcing Changes - Definitions and Possible Change Processes;110
4.4.2.1;2.1 Basic Definitions;110
4.4.2.2;2.2 IS Outsourcing Change;115
4.4.2.3;2.3 Antecedents to Change;117
4.4.2.4;2.4 Changes Within Existing Arrangements;118
4.4.3;3 Institutional Perspective;119
4.4.3.1;3.1 Institutional Theory Perspective Explaining Change;119
4.4.3.2;3.2 IS Sourcing and Institutional Processes;123
4.4.4;4 Method;125
4.4.5;5 Analysis and Findings;127
4.4.6;6 Conclusion;132
4.4.7;References;134
5;Part III: Outsourcing Relationship Issues;139
5.1;Legal and Tax Considerations in Outsourcing;140
5.1.1;1 Introduction;140
5.1.2;2 Structuring Outsourcing Projects;142
5.1.3;3 Offshore Outsourcing Agreements;145
5.1.3.1;3.1 The Scope of Services;146
5.1.3.2;3.2 Service Levels;146
5.1.3.3;3.3 Service Fees;147
5.1.3.4;3.4 Managing the Service Provider;147
5.1.3.5;3.5 Coordination of Project Activities;147
5.1.3.6;3.6 Intellectual Property (IP);148
5.1.3.7;3.7 Privacy and Data Protection;149
5.1.3.8;3.8 Employees and Subcontractors;150
5.1.3.9;3.9 Other Issues in Agreements;151
5.1.4;4 Project Term and Termination;153
5.1.4.1;4.1 Automatic Renewal;154
5.1.4.2;4.2 Early Termination;154
5.1.4.3;4.3 Transition;154
5.1.5;5 Tax Implications;155
5.1.6;6 Governing Law and Jurisdiction;156
5.1.6.1;6.1 Alternate Dispute Resolution (ADR);156
5.1.6.2;6.2 Enforcement of Foreign Awards and Judgments;157
5.1.6.3;6.3 Applicability of Foreign Laws;158
5.1.7;7 Negotiation;159
5.1.8;8 Conclusion;161
5.1.9;References;162
5.2;Measuring and Managing IT Outsourcing Risk: Lessons Learned;164
5.2.1;1 Introduction;164
5.2.1.1;1.1 Risk Defined;165
5.2.2;2 IT Outsourcing Risk;167
5.2.2.1;2.1 Assessing IT Outsourcing Risk Exposure;168
5.2.3;3 The Case Studies;173
5.2.3.1;3.1 Managers’ Attitude Toward Risk;174
5.2.3.2;3.2 Risk Management as a Series of Compromises;176
5.2.3.3;3.3 Risk Management and Impact Evaluation;178
5.2.3.4;3.4 Risk Management and Contract Design;180
5.2.4;4 Discussion and Conclusion;183
5.2.5;References;184
5.3;Governance of Remotely Outsourced Software Development: A Comparison of Client and Vendor Perspectives;189
5.3.1;1 Introduction;189
5.3.2;2 Coordination and Control in IS Development;191
5.3.3;3 Research Methods;194
5.3.3.1;3.1 Data Analysis;197
5.3.4;4 Results;198
5.3.4.1;4.1 The Governance Mechanisms;198
5.3.4.2;4.2 The Evolution of Governance Mechanisms;204
5.3.5;5 Discussion;209
5.3.6;References;212
5.3.7;Appendix: The Cases;215
5.3.7.1;Study 1;215
5.3.7.2;Study 2;217
5.3.7.3;Study 3;220
5.4;Spiraling Effect of IS Outsourcing Contract Interpretations;225
5.4.1;1 Introduction;225
5.4.2;2 Tale of Two Contracts;226
5.4.2.1;2.1 First Fidelity Bancorporation;227
5.4.2.2;2.2 Republic Bank;229
5.4.3;3 Conceptual Foundation;230
5.4.3.1;3.1 Guiding Research Parameters;231
5.4.4;4 Case Research Methodology;234
5.4.4.1;4.1 Sample Selection;234
5.4.4.2;4.2 Procedures;235
5.4.4.3;4.3 Measures;235
5.4.4.4;4.4 Analysis;239
5.4.4.5;4.5 Case Descriptions;240
5.4.5;5 Results;242
5.4.5.1;5.1 Ideal IS Outsourcing Arrangements;242
5.4.5.2;5.2 Types Are Better When?;247
5.4.5.3;5.3 Discussion of Possible IS Outsourcing Arrangements;251
5.4.6;6 Summary;254
5.4.7;References;255
5.4.8;Appendix 1: Case Study Rigour;257
6;Part IV: Experiences and Outcome of IS Outsourcing;259
6.1;The Normative Value of Transaction Cost Economics: What Managers Have Learned About TCE Principles in the IT Context;260
6.1.1;1 Introduction;260
6.1.2;2 The Outsourcing Phenomenon from the Lenses of Economics and Strategy;262
6.1.2.1;2.1 Transaction Cost Economics;262
6.1.2.2;2.2 Theoretical Counter-Attacks and Alternatives to TCE;264
6.1.3;3 Research Approaches;265
6.1.4;4 The Optimal Governance of IT: Lessons Learned and Principles Applied by IT Managers;269
6.1.4.1;4.1 Lesson: TCE Logic Is Not Intuitive, and Managers Learned through Their Mistakes in the 1980’ s How to Craft More Effective Contracts in the Mid 1990’ s;269
6.1.4.2;4.2 Lesson: Managers Realize Higher Performance When They Apply the TCE Principle to Not Outsource the Most Specialized Activities;272
6.1.4.3;4.3. Lesson: Managers Realize Higher Satisfaction When They Apply the TCE Principle to Measure and Benchmark the Performance of IT Activities;275
6.1.4.4;4.4 Lesson: Managers Realize Higher Performance When They Complement Their Use of Customized Contracts with Supportive Relational Norms. They Also Realize Higher Performance When Investing in Just Relational Norms;277
6.1.5;5 Conclusion;281
6.1.6;References;282
6.2;Success of IS Outsourcing as a Predictor of IS Effectiveness: Does IT Governance Matter?;284
6.2.1;1 Introduction;284
6.2.1.1;1.1 Evolution of IS Outsourcing;284
6.2.1.2;1.2 Objectives and Outline of This Paper;286
6.2.2;2 The Theoretic Context of IS Outsourcing;287
6.2.2.1;2.1 Strategic Alignment Model;287
6.2.2.2;2.2 IT Governance;288
6.2.2.3;2.3 Discussion;288
6.2.3;3 Research Methodology;289
6.2.3.1;3.1 Framework and Hypotheses;289
6.2.3.2;3.2 Measurement of the Key Variables;291
6.2.3.3;3.3 Data Collection;292
6.2.4;4 Results;293
6.2.4.1;4.1 Responses;293
6.2.4.2;4.2 IS Outsourcing in General;293
6.2.4.3;4.3 Testing the Base Relation H1;293
6.2.4.4;4.4 Testing the Base Relations H2 and H3;294
6.2.4.5;4.5 Testing the Moderating Relationship of Integration and Outsourcing Success (H4);295
6.2.4.6;4.6 Testing the Relationship Between IT Decision Power and Outsourcing Success (H5);297
6.2.5;5 Conclusions;298
6.2.6;References;299
6.2.7;Appendix;302
6.2.7.1;Table A: Original Survey Questions;302
6.3;Four Stories of Information Systems Insourcing;304
6.3.1;1 Introduction;304
6.3.2;2 Sourcing Definitions;306
6.3.3;3 Research Design;306
6.3.3.1;3.1 Research Project;307
6.3.3.2;3.2 Data Collection;308
6.3.3.3;3.3 Data Interpretation;314
6.3.3.4;3.4 Research Validity;314
6.3.4;4 Four Stories of Insourcing;316
6.3.4.1;4.1 Story I – Senior Executives Enable Internal IS Managers To Cut Costs;318
6.3.4.2;4.2 Story II – IS Managers Terminate Failing Outsourcing Contracts;324
6.3.4.3;4.3 Story III – IS Managers Defend Insourcing;326
6.3.4.4;4.4 Story IV – Senior Executives Confirm The Value of IS;330
6.3.5;5 Morals of the Stories;334
6.3.5.1;Moral 1: IS can indeed replicate outsourcing vendor strategies leading to reduced IS costs;334
6.3.5.2;Moral 2: Perceptions of insourcing success are not solely related to financial outcomes;336
6.3.5.3;Moral 3: Senior management’s perceptions of insourcing success depends upon IS management’s ability to convince them they are cost- competitive relative to the market;339
6.3.6;6 Conclusions;342
6.3.7;References;344
6.4;Capabilities for Information Systems Outsourcing Success: Insights from the Resource- based View of the Firm;348
6.4.1;1 Introduction;348
6.4.2;2 Previous Research;348
6.4.3;3 Theoretical Framework;353
6.4.4;4 Model Development;354
6.4.4.1;4.1 Vendor Capabilities;355
6.4.4.2;4.2 Customer Capabilities;356
6.4.4.3;4.3 Overall Capabilities;358
6.4.4.4;4.4 Relationship Strength;358
6.4.4.5;4.5 Quality;359
6.4.4.6;4.6 Satisfaction;359
6.4.5;5 Research Methodology;360
6.4.5.1;5.1 Data Collection;360
6.4.5.2;5.2 Operationalization of Constructs;363
6.4.5.3;5.3 Analysis;363
6.4.6;6 Results;366
6.4.7;7 Discussion;367
6.4.7.1;7.1 Limitations and Implications;370
6.4.8;8 Conclusion;371
6.4.9;References;372
6.4.9.1;Appendix: Items and Descriptive Statistics;377
7;Part V: Vendor View and Individual Level Perspective;380
7.1;Vendor Strategies in the German Market for Information Technology and Business Process Outsourcing ;381
7.1.1;1 Introduction;381
7.1.2;2 Conceptual Framework;382
7.1.2.1;2.1 Analysis of Internal CSF;384
7.1.2.2;2.2 Analysis of Strategy Profiles;386
7.1.3;3 Methodology;387
7.1.4;4 Empirical Results;388
7.1.4.1;4.1 Macro Level Environment;388
7.1.4.2;4.2 Analysis of Industry Structure;389
7.1.4.3;4.3 Formation and Analysis of Strategic Groups;391
7.1.5;5 Conclusion and Future Orientation;397
7.1.6;Literature;399
7.2;Work Outcomes and Job Design for Contract Versus Permanent Information Systems Professionals on Software Development Teams;403
7.2.1;1 Introduction;403
7.2.2;2 Study 1: The Survey Social Exchange and Norms of Reciprocity;406
7.2.2.1;2.1 Social Exchange Relationships and Social Comparisons in IS Contracting;406
7.2.2.2;2.2 Work Attitudes (Self-Assessments);408
7.2.2.3;2.3 Work Behaviors;410
7.2.2.4;2.4 Work Performance;411
7.2.2.5;2.5 Method;413
7.2.2.6;2.6 Statistical Analysis;419
7.2.2.7;2.7 Results;420
7.2.2.8;2.8 Discussion;423
7.2.3;3 Study 2: The Case Studies;424
7.2.3.1;3.1 Job Design and Work Outcomes;424
7.2.3.2;3.2 Site Selection and Research Setting;425
7.2.3.3;3.3 Data Collection;425
7.2.3.4;3.4 Textual Analysis: Analytical Strategy and Reliability Assessment;426
7.2.3.5;3.5 Results;427
7.2.3.6;3.6 Job Design Features;430
7.2.4;4 Overall Discussion and Conclusion;432
7.2.5;References;435
7.3;When Subordinates Become IT Contractors: Persistent Managerial Expectations in IT Outsourcing;442
7.3.1;1 Introduction;442
7.3.2;2 Persistent Expectations in IT Outsourcing;444
7.3.3;3 Study 1: Development of Theoretical Model;446
7.3.3.1;3.1 Study 1: Method;447
7.3.3.2;3.2 Study 1: Results and Theoretical Model;449
7.3.4;4 Study 2: Validation of Theoretical Model;458
7.3.4.1;4.1 Study 2: Method;458
7.3.4.2;4.2 Study 2: Results;460
7.3.4.3;4.3 Study 2: Discussion;463
7.3.5;5 Conclusion;466
7.3.5.1;5.1 Limitations and Future Research;467
7.3.6;References;469
7.3.7;Appendix;474
7.3.7.1;Appendix A;474
7.3.7.2;Appendix B;476
8;Part VI: Application Service Providing and Business Process Outsourcing;477
8.1;Understanding the ‘Service’ Component of Application Service Provision: An Empirical Analysis of Satisfaction with ASP Services ;478
8.1.1;1 Application Service Providers: Promise and Reality;478
8.1.2;2 Understanding Satisfaction with ASP;480
8.1.2.1;2.1 Satisfaction and IT Outsourcing;480
8.1.2.2;2.2 Satisfaction and the ASP Business Model;482
8.1.3;3 A Model of Satisfaction Determinants;483
8.1.3.1;3.1 Defining the Satisfaction Construct;483
8.1.3.2;3.2 The Role of Perceived Provider Performance;484
8.1.3.3;3.3 Expectations about ASP Service: The Effect of Technical Guarantees and Functional Capability of the ASP;485
8.1.3.4;3.4 Prior Experience of the Firm: The Effect of Prior Internet Usage, the Maturity of Internal IT and Prior Systems Integration;488
8.1.3.5;3.5 The Disconfirmation Experience;491
8.1.4;4 Research Method, Data Collection and Analysis;492
8.1.4.1;4.1 Initial Qualitative Survey and Instrument Design;492
8.1.4.2;4.2 Analyzing the Measure Validity and Reliability;494
8.1.4.3;4.3 Assessing Potential Over Identification Issues;496
8.1.4.4;4.4 Model Estimation and Goodness of Fit;497
8.1.4.5;4.5 Findings from the Study;498
8.1.5;5 Discussion of Results;500
8.1.5.1;5.1 Implications from Findings;500
8.1.5.2;5.2 Implications for IS Literature;502
8.1.6;6 Conclusions and Directions for Future Research;503
8.1.7;References;504
8.1.8;APPENDIX;514
8.1.8.1;Survey Instruments;514
8.1.8.2;I Perceived Provider Performance;515
8.1.8.3;II Satisfaction with ASP;515
8.1.8.4;III Prior Internet Usage of the Organization;516
8.1.8.5;IV Prior Systems Integration;516
8.1.8.6;V Maturity of Internal IT;517
8.1.8.7;VI Disconfirmation;517
8.1.8.8;VII Functional Capability of the ASP;518
8.1.8.9;VIII Technical Service Guarantees;518
8.2;Developing a Sustainable Value Proposition in Web Services: Lessons from Strategic Management;519
8.2.1;1 Introduction;519
8.2.2;2 Web Services: A New Paradigm for Business?;520
8.2.3;3 Key Factors for Sustaining Value in Web Services;521
8.2.4;4 Three Pilars of Competitive Advantage;524
8.2.4.1;4.1 Building Market Leadership;526
8.2.4.2;4.2 Creating Strategic Differentiation;528
8.2.4.3;4.3 Enhancing Revenue Generation;531
8.2.5;5 Conclusion and Future Research Directions;534
8.2.6;References;536
8.3;Business Process Outsourcing, Knowledge and Innovation – A Study of Enterprise Partnership;538
8.3.1;1 Introduction;538
8.3.2;2 Research Scope and Methodology;540
8.3.3;3 Background: Creating the Xchanging Company;541
8.3.4;4 The Distinctive Business Model: Enterprise Partnership;542
8.3.5;5 A New Implementation Model;545
8.3.6;6 Competencies – ‘The DNA of Xchanging’;546
8.3.6.1;6.1 The People Competency;547
8.3.6.2;6.2 The Service Competency;548
8.3.6.3;6.3 The Process Competency;550
8.3.6.4;6.4 The Technology Competency;552
8.3.6.5;6.5 The Environment Competency;555
8.3.6.6;6.6 The Sourcing Competency;556
8.3.6.7;6.7 The Implementation Competency – Grit in the Oyster?;558
8.3.7;7 Progressing the Enterprise Partnerships Through Four Phases of Implementation;559
8.3.8;8 Transforming The Back Office: Summary of Five Approaches;561
8.3.9;9 The Xchanging Business Model – An Assessment;564
8.3.9.1;9.1 Assessment of Partnership, Xchanging-style;564
8.3.9.2;9.2 Sustainable Performance and Innovation in Xchanging Enterprise Partnerships;566
8.3.9.3;9.3 The ‘Fit’ of the Xchanging Business Model;567
8.3.9.4;9.4 Creating and Leveraging Knowledge;571
8.3.10;10 Conclusion;573
8.3.11;References;575
8.4;Business Process Outsourcing: The Hysteresis Effect and Other Lessons;577
8.4.1;1 Introduction;577
8.4.1.1;1.1 Previous Research on BPO;579
8.4.1.2;1.2 The Hysteresis Effect in Complex Outsourcing;580
8.4.2;2 Method;582
8.4.3;3 Case Study Findings;584
8.4.3.1;3.1 Motivations;584
8.4.3.2;3.2 Evaluations;584
8.4.3.3;3.3 Sources of Advice;585
8.4.3.4;3.4 Concerns;586
8.4.4;4 Discussion;586
8.4.4.1;4.1 Motivation;587
8.4.4.2;4.2 Biases in the Evaluation Process;587
8.4.4.3;4.3 Outsourcing, “Impression Management” and Cognitive Biases;589
8.4.4.4;4.4 Other Issues and Concerns;589
8.4.5;5 Implications and Recommendations for Decision- Makers;591
8.4.6;6 Conclusion;594
8.4.7;References;594
9;Part VII: Offshoring and Global Outsourcing;597
9.1;Business Process Offshoring to India: An Overview;598
9.1.1;1 Introduction;598
9.1.2;2 Offshore Outsourcing and the Global BPO Market;599
9.1.2.1;2.1 Issues in Offshore Outsourcing;601
9.1.3;3 India as an Offshore BPO Destination;603
9.1.3.1;3.1 Key Features of the Indian IT and IT-enabled BPO Industry;604
9.1.3.2;3.2 Economics of Business Process Offshoring to India;605
9.1.3.3;3.3 Impact of IT and ITES Offshoring on the Indian IT Services Landscape;608
9.1.3.4;3.4 Offshore Impact on IT Services Pricing;608
9.1.3.5;3.5 Impacts and Implications of Offshore Outsourcing in the US;609
9.1.3.6;3.6 Drivers and Inhibitors;609
9.1.4;4 BPO Service Category Classification;612
9.1.5;5 Case Study: GE’S BPO Operations in India;616
9.1.5.1;5.1 GE Capital International Services (GECIS) India;617
9.1.6;6 Conclusion and Challenges Ahead;621
9.1.7;References;622
9.2;The Maturation of Offshore Sourcing of Information Technology Work;624
9.2.1;1 Offshore IT Sourcing Is Gaining IT Management Attention;624
9.2.2;2 Four Stages of Offshore IT Sourcing;626
9.2.2.1;2.1 Stage 1: Offshore Bystander;627
9.2.2.2;2.2 Stage 2: Offshore Experimenter;629
9.2.2.3;2.3 Stage 3: Proactive Cost Focus;630
9.2.2.4;2.4 Stage 4: Proactive Strategic Focus;633
9.2.2.5;2.5 Tech Insourcers: One Type of Stage 4 Firm;634
9.2.3;3 U.S. Firms Will Move Up the Maturity Curve;636
9.2.4;4 Offshore IT Sourcing by U.S. Firms Will Continue to Grow;637
9.2.5;5 The Global IT Labor Supply Will Grow and Mature;638
9.2.6;6 Recommendations for IT Executives;640
9.2.7;References;641
9.2.8;Appendix: Study Methodology;642
9.2.8.1;The Study Sample;642
9.2.8.2;Data Collection Approach;643
9.3;Managing Cross-Cultural Issues in Global Software Outsourcing;644
9.3.1;1 Managing Cross-Cultural Issues in Global Software Outsourcing;644
9.3.2;2 Strategic Choice of Projects;646
9.3.3;3 Managing the Relationship;647
9.3.4;4 Staffing Issues;648
9.3.5;5 Training;649
9.3.6;6 Conclusions;650
9.3.7;References;651
9.4;Knowledge Management in Offshore Software Development;652
9.4.1;1 Introduction;652
9.4.2;2 Conceptual Scheme: Knowledge and Offshore Software Development;654
9.4.3;3 Research Approach;657
9.4.4;4 Case Description and Analysis;658
9.4.4.1;4.1 Initiation and Growth Phase (1998 – 1999);659
9.4.4.2;4.2 Failure to Reach Maturity and Closure (1999-2000);665
9.4.5;5 Discussion and Implications;669
9.4.5.1;5.1 Encultured Knowledge;669
9.4.5.2;5.2 Embedded Knowledge;670
9.4.5.3;5.3 Encoded Knowledge;671
9.4.5.4;5.4 Implications for Practice;673
9.4.5.5;5.5 Implications for Theory;674
9.4.6;References;676
9.5;Offshore Outsourcing: Challenge to the Information Systems Discipline;679
9.5.1;1 The Growth of Offshoring;679
9.5.2;2 The Immediate Consequences of Offshoring;679
9.5.3;3 The Fundamental Nature of Offshoring;682
9.5.4;4 Implications for the Future of the Discipline;683
9.5.5;5 Conclusions;687
9.5.6;References;689
10;Index;692

Leseproben

Costs, Transaction-Specific Investments and Vendor Dominance of the Marketplace: The Economics of IS Outsourcing (p. 26-27)

Soon Ang
School of Accountancy and Business, Nanyang Technological University, Nanyang Avenue 2263, Republic of Singapore, [e-mail], FAX: [phone]

Detmar Straub
Robinson College of Business, Computer Information Systems Department, Georgia State University, University Plaza, Atlanta, GA 30303-4012, [e-mail], 404-651-3880, FAX: [phone]

1 Introduction

The strategic importance of information systems (IS) in banking is widely substantiated (Steiner and Teixeira 1990, OECD 1992, Office of Technology Assessment 1984, Office of Technology Assessment 1987, Apte et al 1990, McFarlan and McKenney 1983). Yet, in spite of this, some banks have outsourced their entire information services function (American Bankers Association 1981, 1986, 1990). On the surface, it seems counterintuitive that banks should potentially erode their competence in the design and delivery of strategic financial services relying heavily on information technology (IT). Part of the explanation lies in past behaviors and long standing theories about how organizations respond to their environment. According to classical theories of the firm, organizations strive toward autonomy (Gouldner 1959, Burt 1982). They maintain independence by integrating as many business activities as possible within their hierarchical control. By means of backward and forward integration, organizations secure access to markets, safeguard suppliers to raw materials, and prevent competitors from obtaining such access.

While corporations overall have demonstrated many of these tendencies in the post World War II era, a reversal of this trend had begun to emerge by the mid- 1980s (Harrison and St. John 1996). Described as "hollowing out of the corporation," organizations began to relinquish internal control and depend more heavily on external service-providers. Outsourcing prompted firms to abandon internal production bases and rely on others for manufacturing, distribution, and other business functions.

The growing practice of outsourcing in modern corporations has led both academics and practitioners to theorize and speculate about the underlying momentum towards outsourcing. The intriguing question is: If organizations are "dependence-avoiders" (Gouldner 1959), why expose oneself to inter-organizational dependencies in outsourcing arrangements? In addition to external dependencies, outsourcing brings on costly and radical changes. It creates upheavals in existing organizational structure and redefines organizational roles. Organizations must hire and terminate employees, sell off fixed assets, and plan for geographical relocation of firm operations.

The evolving literature on information technology (IT) outsourcing offers a variety of explanations for why outsourcing occurs. Many of these arguments have a basis in economic theories and models. One of the most commonly cited reasons, for example, is that managers feel that they can gain cost advantages by hiring outsiders to perform certain services and produce certain products (Alpar and Sharia 1995, Loh and Venkatraman 1992a). Transaction cost theory offers another economic perspective (Nam, Rajagopalan, Rao, and Chaudhury 1996) that typically frames outsourcing as a decision about drawing firm boundaries (Pisano 1990, Mosakowski 1991) or as vertical integration (Anderson and Schmittlein 1984, Monteverde and Teece 1982, Harrigan 1985). Financial slack and firm size are other factors which can be conceptualized, at least in part, as economic constructs.

This study argues that we can improve our ability to explain outsourcing within the larger context of organizational responses to their strategic environment by focusing on such economic considerations. Our findings suggest which factors play into the outsourcing decision and their relative importance in sourcing choices.