Springer-Verlag Berlin Heidelberg GmbH

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1 Information Systems Outsourcing Springer-Verlag Berlin Heidelberg GmbH

2 Rudy Hirschheim Armin Heinzl. Jens Dibbern Editors Information Systems Outsourcing Enduring Themes, Emergent Patterns and Future Directions With 43 Figures and 60 Tables i Springer

3 Professor Dr. Rudy Hirschheim University of Houston Bauer College of Business Houston,TX, USA Professor Dr. Armin Heinzl Dipl.-Kfm. Jens Dibbern UniversiHit Bayreuth UniversiHitsstraBe Bayreuth, Germany ISBN ISBN (ebook) DOl / Library of Congress Cataloging-in-Publication Data applied for Die Deutsche Bibliothek - CIP-Einheitsaufnahme Information Systems Outsourcing: Enduring Themes, Emergent Patterns and Future Directions; with 60 Tables / Rudy Hirschheim... ed. - Berlin; Heidelberg; New York; Barcelona; Hong Kong; London; Milan; Paris; Tokyo: Springer, 2002 This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilm or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer-Verlag. Violations are liable for prosecution under the German Copyright Law. Springer-Verlag Berlin Heidelberg 2002 Originally published by Springer-Verlag Berlin Heidelberg New York in Softcover reprint of the hardcover 1 st edition 2002 The use of general descriptive names, registered names, trademarks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. Cover design: Erich Kirchner, Heidelberg

4 Preface The research on IS outsourcing has evolved rapidly over the past decade. Outsourcing has emerged as a key topic for both IS practitioners and academics. Whilst academics may have lagged behind their practitioner brethren in recognizing its importance in the beginning, they have begun to catch up. By our quick count, there are over 90 academic papers that have been published on IS outsourcing since 1992, along with numerous doctoral dissertations. Moreover, there has been virtually no major IS conference without a substantial outsourcing track. Thus, we felt the time was right to arrange a compilation of contemporary outsourcing research as a common platform for mutual interaction and scientific discourse. This book brings together key researchers who had published or were currently working on academic publications or dissertations in IS outsourcing. In this realm it is dedicated towards both researchers and practitioners. It is the result of thoughtfully selected contributions from leading researchers who came together for the Second International Conference on Outsourcing of Information Services (ICOIS'2001) held in Bayreuth, Germany during June 22-23rd, Their papers form the basis of this edited volume entitled Information Systems Outsourcing in the New Economy: Enduring Themes, Emergent Patterns and Future Direction. We hope you enjoy the resulting product. Rudy Hirschheim Houston, Texas Armin Heinzl Bayreuth, Germany Jens Dibbern Bayreuth, Germany

5 Contents Preface v Part I: Overview Information Systems Outsourcing in the New Economy - An Introduction 3 Hirschheim, Rudy; Dibbern, fens On the Theoretical Foundations of Current Outsourcing Research 24 Klein, Heinz K. Part II: Determinants of the IS Outsourcing Decision 45 Costs, Transaction-Specific Investments and Vendor Dominance of the Marketplace: The Economics of IS Outsourcing 47 Ang, Soon; Straub, Detmar Outsourcing of Information Systems in Small and Medium Sized Enterprises: A Test of a Multi-Theoretical Causal Model 77 Dibbern, fens; Heinzl, Armin IT Sourcing - A Dynamic Phenomenon: Forming an Institutional Theory Perspective 100 fayatilaka, Bandula A Taxonomy of Employment Insourcing and Outsourcing Strategies in Information Systems 131 Ang, Soon; Slaughter, Sandra A.

6 VIII Contents Part III: Arranging and Managing IS Outsourcing Relationships 153 Managing IT Outsourcing Risk: Lessons Learned 155 Aubert, Benoit A.; Patry, Michel; Rivard, Suzanne Applying Traditional Risk-Return Analysis to Strategic IT Outsourcing Decisions 177 lurison,laak Further Thoughts on Information Structure, Knowledge Management and Outsourcing 187 Elitzur, Ramy; Wensley, Anthony K.P. Current and Future Directions of IS Outsourcing 195 Lee, lae-nam; Huynh, Minh Q.; Kwok, Ron Chi-wai; Pi, Shih-Ming Relational Exchange Theory and IS Outsourcing: Developing a Scale to Measure Relationship Factors 221 Goles, Tim; Chin, Wynne W. Part IV: Experiences and Outcome of IS Outsourcing 251 The Normative Value of Transaction Cost Economics: What Managers Have Learned About TCE Principles in the IT Context 253 Poppo, Laura; Lacity, Mary C. Spiraling Effect of IS Outsourcing Contract Interpretations 277 Marcolin, Barbara L. Success of Outsourcing and Strategic Alignment as Predictors of IS Effectiveness 311 Siiiiksjiirvi, Markku Outsourcing: A View from Those Doing the Work Saunders, Carol Four Stories of Information Systems Insourcing Hirschheim, Rudy; Lacity, Mary C

7 Contents Part V: Integration, Transaction and Recruitment Platforms IX 393 IS Integration in the Internet Age: Exploring Alternate Infrastructure Sourcing Strategies 395 Duncan, Nancy B. Transaction Platforms as Flexible Interorganizational Systems: The Case of M-Cornrnerce Payment Services in the Financial Logistical Management ofthe Dutch Payment Industry 415 Wassenaar, D. Arjen; Swagerman, Dirk M. Cybermediaries Supporting the Management of Independent Workers: A Case Study of Extended Outsourcing Relationships 432 Knolmayer, Gerhard F. Part VI: Application Service Providing (ASP) 449 Application Service Provision: The IS Infrastruct).lfe Context 451 Smith, Michael Alan A Market Segmentation Strategy for Developing an ASP Business 474 Currie, Wendy L.; Seltsikas, Philip Impact of Vendor Capabilities on ASP Performance 497 Swinarski, Matthew E.; Kishore, Rajiv; Rao, H. Raghav Service Provision and the Net: Risky Application Sourcing? 513 Kern, Thomas; Willcocks, Leslie P. List of Contributors 535 Sponsors 539