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Industry Norms as Predictors of IT Outsourcing Behaviors

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  • Prawesh, Shankar
  • Chari, Kaushal
  • Agrawal, Manish

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.

Suggested Citation

  • Prawesh, Shankar & Chari, Kaushal & Agrawal, Manish, 2021. "Industry Norms as Predictors of IT Outsourcing Behaviors," International Journal of Information Management, Elsevier, vol. 56(C).
    • Handle: RePEc:eee:ininma:v:56:y:2021:i:c:s0268401220314419
    DOI: 10.1016/j.ijinfomgt.2020.102242
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    Cited by:

    1. Thyago Celso Cavalcante Nepomuceno & Késsia Thais Cavalcanti Nepomuceno & Thiago Poleto & Victor Diogho Heuer de Carvalho & Ana Paula Cabral Seixas Costa, 2022. "When Penalty Fails: Modeling Contractual Misincentives With Evidence From Portugal ITO Agreements," SAGE Open, , vol. 12(4), pages 21582440221, December.

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