Industry Norms as Predictors of IT Outsourcing Behaviors |
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| Institution: | 1. Indian Institute of Technology, Kanpur, India;2. University of Wisconsin, Milwaukee, Wisconsin, USA;3. University of South Florida, Tampa, Florida, USA;1. Graduate Institute of Global Business and Strategy, National Taiwan Normal University, Taipei, Taiwan;2. National Taipei University of Education, Taipei, Taiwan;1. Management Information Systems Group, Indian Institute of Management Calcutta, Kolkata, India;2. Research School of Management, Australian National University, Canberra, Australia;3. Marketing Group, Indian Institute of Management Calcutta, Kolkata, India;1. Effat College of Engineering, Effat University, Jeddah, P.O. Box 34689, Saudi Arabia;2. Effat College of Business, Effat University, Jeddah, P.O. Box 34689, Saudi Arabia;3. Thiagarajar School of Management, Madurai, India;4. King Abdulaziz University, Jeddah, Saudi Arabia;5. Deree College – The American College of Greece, 6 Gravias, Aghia Paraskevi, Athens, 15342, Greece;1. Department of Telecommunication Engg., M.S Ramaiah Institute of Technology, Bengaluru 560054, India;2. Department of Electrical Engg., Indian Institute of Technology Madras, Chennai 600036, India;1. Department of Strategy and Industry, China Mobile Research Institute, China;2. School of Information Systems, Technology and Management, UNSW Business School, UNSW, Australia;3. Business School, Qingdao University, China;4. School of E-Business and Logistics, Beijing Technology and Business University, China;5. Guanghua School of Management, Peking University, China |
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| Abstract: | How do firm-specific factors impact strategic IT decisions such as IT outsourcing? Do non-financial factors influence these decisions? Whereas prior IT outsourcing research has focused primarily on normative, economic drivers of IT outsourcing, we find evidence of firm-specific non-financial factors influencing IT outsourcing decisions. We focus on the social influence perspective and use IT outsourcing decisions as exemplars of strategic IT decisions. Using a data sample of 77 outsourcing contracts from the automotive industry from 1995 to 2010, we find that even after controlling for financial factors, industry average levels of outsourcing can be used to distinguish strategic outsourcing behaviors of firms for IT enabled services. Firms with above-average levels of IT outsourcing tended to further increase outsourcing, a behavior consistent with perceived Red Queen competitive pressures. Firms with below-average levels of IT outsourcing showed no measurable trends of either increasing or decreasing outsourcing levels. This suggests that firm-specific factors influence IT outsourcing decisions and deviations from non-financial industry norms can indicate how firms make strategic IT decisions. |
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| Keywords: | Information systems outsourcing information technology enabled services outsourcing contracts Red Queen effect IT capability |
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