The Impact of I.T. on the Degree of Outsourcing, the Number of Suppliers and the Duration of Contracts

Abstract:     
It has long been accepted within the information technology (IT) research community that IT should have a profound impact on industrial organization. However, there has been as yet no consensus on the changes to be expected in the design of firms or industries; rather, there is an apparently inconsistent collection of conjectures and analyses. We are now able to offer an integrative framework for describing the impacts of IT on an industrial organization. Our analyses generally support the "move to the middle" hypothesis that states that the impact of IT on the organization of economic activity is to lead to a greater degree of outsourcing where this increased outsourcing is done from fewer suppliers with whom the buyer has long-term relationships.

JEL Classifications: L16

Working Paper Series