The Role of Contracts and Informal Relations in the Governance of IT Outsourcing Processes

This paper aims to give a contribution to represent and comprehend the characteristics of the relationships between customers and providers in the specific context of IT services supply; furthermore it provides its peculiar perspective on the relationship between the formal governance, which is mostly realized through the use of contracts, and the informal relations based on trust and commitment between the parties. Moreover, the current study underlines that within contexts which are strongly based on the uncertain evolution both of market and technology, the governance of IT outsourcing processesneeds the development of complex informal relationships in support of the contracts. The study shows how it is possible to absorb the effects of the market and technology uncertainty within the IT outsourcing contracts. Moreover, the research shows how the use of dynamic contracting together with an explicit attention to the social processes can lead to remarkable operative and strategic benefits.

[1]  L. Willcocks,et al.  Interpreting information technology sourcing decisions from a transaction cost perspective: Findings and critique , 1995 .

[2]  Leslie P. Willcocks,et al.  Beyond BRIC: offshoring in non-BRIC countries: Egypt – a new growth market: an LSE Outsourcing Unit report January 2009 , 2009 .

[3]  Todd R. Zenger,et al.  Do Formal Contracts and Relational Governance Function as Substitutes or Complements , 2002 .

[4]  C. Saunders,et al.  Achieving Success in Information Systems Outsourcing , 1997 .

[5]  R. Hirschheim.  Information Systems Outsourcing , 2002 .

[6]  J. Steenkamp,et al.  The Effects of Perceived Interdependence on Dealer Attitudes , 1995 .

[7]  Leslie P. Willcocks,et al.  Strategic sourcing of information systems , 1998 .

[8]  Varun Grover,et al.  The Effect of Service Quality and Partnership on the Outsourcing of Information Systems Functions , 1996, J. Manag. Inf. Syst..

[9]  Jahyun Goo,et al.  A Path to Successful IT Outsourcing: Interaction Between Service-Level Agreements and Commitment , 2008, Decis. Sci..

[10]  J. Barthélemy.  The Hidden Costs of IT Outsourcing , 2001 .

[11]  B. Nooteboom,et al.  Effects of trust and governance on relational risk. , 1997 .

[12]  Guy Fitzgerald,et al.  Information technology outsourcing in Europe and the USA: Assessment issues , 1995 .

[13]  Sirkka L. Jarvenpaa,et al.  Is Anybody Out There? Antecedents of Trust in Global Virtual Teams , 1998, J. Manag. Inf. Syst..

[14]  James Richardson.  PARALLEL SOURCING AND SUPPLIER PERFORMANCE IN THE JAPANESE AUTOMOBILE INDUSTRY , 1993 .

[15]  A. Zaheer,et al.  Relational governance as an interorganizational strategy: An empirical test of the role of trust in economic exchange , 1995 .

[16]  Ian R. Macneil.  The new social contract: An inquiry into modern contractual relations , 1980 .

[17]  Thomas Roehl,et al.  Managing Product Development , 1998 .

[18]  O. Williamson.  Markets and Hierarchies , 1975 .

[19]  M. Aiken,et al.  Organizational interdependence and intra-organizational structure. , 1968 .

[20]  George P. Baker,et al.  Subjective Performance Measures in Optimal Incentive Contracts , 1993 .

[21]  Leslie P. Willcocks,et al.  Exploring information technology outsourcing relationships: theory and practice , 2000, J. Strateg. Inf. Syst..

[22]  Volker Mahnke,et al.  The Process of Vertical Dis-Integration: An Evolutionary Perspective on Outsourcing , 2001 .

[23]  R. P. Dant,et al.  Conflict Resolution Processes in Contractual Channels of Distribution , 1992 .

[24]  P. Weill,et al.  Building IT Infrastructure for Strategic Agility , 2002 .

[25]  Maris G. Martinsons.  Outsourcing information systems: A strategic partnership with risks , 1993 .

[26]  Charles Spinosa,et al.  Promise-based management: the essence of execution. , 2007, Harvard business review.

[27]  Young-Gul Kim,et al.  Effect of Partnership Quality on IS Outsourcing Success: Conceptual Framework and Empirical Validation , 1999, J. Manag. Inf. Syst..

[28]  Efraim Turban,et al.  Business Intelligence: Second European Summer School, eBISS 2012, Brussels, Belgium, July 15-21, 2012, Tutorial Lectures , 2013 .

[29]  Leslie P. Willcocks,et al.  Co-operative partnership and ‘total’ IT outsourcing: From contractual obligation to strategic alliance? , 1995 .

[30]  Benjamin Klein,et al.  Why 'Hold-Ups' Occur: The Self-Enforcing Range of Contractual Relationships , 1996 .

[31]  Donald N. Sull,et al.  Promise-based the essence of execution management , 2007 .

[32]  Leslie P. Willcocks,et al.  The Handbook of Global Outsourcing and Offshoring , 2009 .

[33]  Todd R. Zenger,et al.  Testing Alternative Theories of the Firm: Transaction Cost, Knowledge-Based, and Measurement Explanations for Make-or- Buy Decisions in Information Services , 1997 .

[34]  Rajiv Kishore,et al.  The Role of Service Level Agreements in Relational Management of Information Technology Outsourcing: An Empirical Study , 2009, MIS Q..

[35]  S. Ghoshal,et al.  Bad for Practice: A Critique of the Transaction Cost Theory , 1996 .

[36]  R. Gulati.  Does Familiarity Breed Trust? The Implications of Repeated Ties for Contractual Choice in Alliances , 1995 .

[37]  D. Lambert,et al.  Supply Chain Management: Implementation Issues and Research Opportunities , 1998 .

[38]  K. Eisenhardt.  Building theories from case study research , 1989, STUDI ORGANIZZATIVI.

[39]  A. Pettigrew.  Longitudinal Field Research on Change: Theory and Practice , 1990 .

[40]  Kirk P. Arnett,et al.  Firms that choose outsourcing: A profile , 1994, Inf. Manag..

[41]  Jean Hartley,et al.  Case study research , 2004 .

[42]  Suzanne Rivard,et al.  A transaction cost approach to outsourcing behavior: Some empirical evidence , 1996, Inf. Manag..

[43]  F. Nye,et al.  Social Exchange in Developing Relationships , 1979 .