An Organizational-Economic Blueprint for Information Technology Outsourcing: Concepts and Evidence

The emergence of information technology (IT) as a critical determinant for business productivity brings a fundamental need to align the IT strategy with the corporate strategy. A basic issue arising from this imperative is the choice of effective structural mechanisms to govern the IT function. Our paper constructs and tests an integrated governance model of IT outsourcing at both the fm and the dyadic levels. Itextendsthetraditionalboundaryoforganizationaleconomicstodevelopemergingdomainssuch as bargaining costs, influence costs, management costs,and decision information costs. Within a context of IT outsourcing, key constructs and corresponding measures inherent in each cost domain are developed and tested. The data are drawn from surveys involving a large sample of 463 senior IT managers across 209 leading corporations in the U.S