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Determinants of contract completeness for information technology outsourcing

Author

Listed:
  • Benoit A. Aubert

    (Victoria University of Wellington)

  • Jean Francois Houde

    (University of Pennsylvania)

  • Suzanne Rivard

    (HEC Montreal)

  • Michel Patry

    (HEC Montreal)

Abstract

This study developed and tested a model of the determinants of completeness of IT outsourcing contracts. The model is based on the assumption that the level of contract completeness results from a trade-off between the cost of developing a complete contract and the protection it offers. In contrast with outsourcing in many other sectors, IT outsourcing can be a temporary measure, with the anticipation that activities can be reintegrated in-house. This means that managers have to take into account the time horizon when deciding on the level of completeness of the contract. Results show that firms rely on more complete contracts when outsourcing is seen as a permanent approach. Also, transaction cost theory variables play multiple roles. Uncertainty reduces the level of completeness, while idiosyncrasy reduces partly the use of permanent outsourcing. Demand predictability, representing frequency, plays a dual role, increasing completeness but reducing the likelihood that outsourcing is used as a permanent solution.

Suggested Citation

  • Benoit A. Aubert & Jean Francois Houde & Suzanne Rivard & Michel Patry, 2017. "Determinants of contract completeness for information technology outsourcing," Information Technology and Management, Springer, vol. 18(4), pages 277-292, December.
    • Handle: RePEc:spr:infotm:v:18:y:2017:i:4:d:10.1007_s10799-016-0265-5
    DOI: 10.1007/s10799-016-0265-5
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    References listed on IDEAS

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    1. Mohammed Musa Bayero, 2023. "IT Infrastructure, Knowledge Management and Firm Competitiveness: Exploring Mediating Role of IT Outsourcing in Nigeria," International Journal of Global Business and Competitiveness, Springer, vol. 18(1), pages 43-58, June.

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