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Surviving in Global Online Labor Markets for IT Services: A Geo-Economic Analysis

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  • Irfan Kanat

    (College of Business, Ohio University, Athens, Ohio 45701)

  • Yili Hong

    (W. P. Carey School of Business, Arizona State University, Tempe, Arizona 85287)

  • T. S. Raghu

    (W. P. Carey School of Business, Arizona State University, Tempe, Arizona 85287)

Abstract

Global online labor markets (OLMs) lower the barriers to entry and enable global competition for information technology (IT) services from providers around the world. Although the prior OLM literature predominantly found systematic advantages for IT service providers from developed countries because of their higher perceived quality, the reality is that most service providers in OLM are from developing countries. This phenomenon requires a robust analysis of how OLMs are evolving. In this study, we conduct a geo-economic analysis on IT service providers’ survival utilizing a unique longitudinal panel data set from an OLM, which comprises 40,874 IT service providers from different countries over a period of more than four years (2006 to 2010). Based on results from Survival models and a series of robustness checks, we were able to decipher how geo-economic factors (specifically the country development level) and reputation interact to determine service providers’ survival. Our findings provide a different perspective from the prior literature on OLM by showing a systematic advantage for IT service providers from developing countries in terms of survival, especially when providers from developing countries were able to signal their individual quality through reputation. We explain and discuss the mechanisms underlying these effects, and highlight implications for OLMs for IT services.

Suggested Citation

  • Irfan Kanat & Yili Hong & T. S. Raghu, 2018. "Surviving in Global Online Labor Markets for IT Services: A Geo-Economic Analysis," Information Systems Research, INFORMS, vol. 29(4), pages 893-909, December.
    • Handle: RePEc:inm:orisre:v:29:y:2018:i:4:p:893-909
    DOI: 10.1287/isre.2017.0751
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    6. Lingfeng Dong & Ting Ji & Jie Zhang, 2022. "Effects of Conversation Politeness on Hiring Decision in Online Labor Markets: An Inverted U-Shaped Relationship Exploration," Sustainability, MDPI, vol. 14(22), pages 1-11, November.
    7. Yao, Xinlin & Zhang, Peiran & Lu, Xianghua & Huang, Lihua, 2020. "Early or Late? Entry timing in online IT service markets and the moderating effects of market characteristics," Journal of Business Research, Elsevier, vol. 114(C), pages 265-277.
    8. Jiaxu Peng & Jungpil Hahn & Ke-Wei Huang, 2023. "Handling Missing Values in Information Systems Research: A Review of Methods and Assumptions," Information Systems Research, INFORMS, vol. 34(1), pages 5-26, March.
    9. Jin Liu & Xingchen Xu & Xi Nan & Yongjun Li & Yong Tan, 2023. ""Generate" the Future of Work through AI: Empirical Evidence from Online Labor Markets," Papers 2308.05201, arXiv.org, revised Jun 2024.
    10. Yunhui Huang & Kai H. Lim & Zhijie Lin & Shunping Han, 2019. "Large Online Product Catalog Space Indicates High Store Price: Understanding Customers’ Overgeneralization and Illogical Inference," Information Systems Research, INFORMS, vol. 30(3), pages 963-979, September.
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