Outsourcing: An IT-Capable Firm's Perspective
46 Pages Posted: 25 Apr 2008 Last revised: 5 May 2008
Date Written: 2008
Recognizing the need to bridge the gap between the outsourcing and the IT capability literature, this study provides a framework for approaching outsourcing decisions from an IT-capable firm's perspective. The paper lays the foundation for a micro-economic framework for contrasting the value-adding proposition of three sourcing options: insourcing (hierarchy), outsourcing (market), and IT outsourcing alliances (hybrid). We use this framework to identify a small and suggestive set of necessary and sufficient conditions under which an IT-capable firm may be able to extract incremental value from an IT outsourcing alliance.
Keywords: IT Outsourcing, IT capability, Business Value of IT, competitive advantage, relational theory, transaction cost economics, reciprocal-learning alliances
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