Moments of Governance in is Outsourcing: Conceptualizing Effects of Contracts on Value Capture and Creation

Miranda, Shaila M.; Kavan, C. Bruce

doi:10.1057/palgrave.jit.2000045

Cited by 86 publications

(102 citation statements)

References 78 publications

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“…They also posit that organizations have an advantage over markets in creating and sharing intellectual capital. Researchers have begun to apply social capital theory to the IT outsourcing context, concluding that this perspective richly enhances our view of outsourcing (Chou et al 2006;George 2006;Miranda and Kavan 2005;Rottman 2007) Thus, maybe domestic contractors at Biotech performed better than offshore IT workers because domestic contractors are essentially insiders. We have one anecdote that suggests that offshore IT workers can essentially become "insiders" over time.…”

Section: Four Insights For Clients and Suppliersmentioning

confidence: 99%

A US Client's Learning from Outsourcing IT Work Offshore

Rottman¹,

Lacity²

2009

Information Systems Outsourcing

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Based on 45 interviews and significant documentation, we explore the offshore outsourcing experiences of a US-based biotechnology company. This company offshore outsourced 21 IT projects to six suppliers in India. Senior managers and the official documents from the Program Management Office consistently reported that offshore outsourcing was successful in reducing the company's IT costs. But interviews with knowledgeable participants actually managing the projects suggest that many projects were not successful in meeting cost, quality, and productivity objectives. We found evidence that this company's offshore strategy to simply replace domestic contractors with cheaper, offshore suppliers was a poor fit with its social and cultural contexts. Specifically, we found that strong social networks between the company's internal IT employees and domestic contractors were not easily replicated with offshore suppliers. Furthermore, the internal project management processes were often incompatible with offshore suppliers' processes. This paper also analyzes seven project characteristics that differentiate highly-rated projects from poorly-rated projects. These project characteristics are type of IT work, size of supplier firm, location of supplier employees (onsite/offshore), dollar value of the contract, duration of the project, timing of the project, and client unit managing the project. The paper concludes with four overall insights for clients and suppliers.

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Section: Four Insights For Clients and Suppliersmentioning

confidence: 99%

A US Client's Learning from Outsourcing IT Work Offshore

Rottman¹,

Lacity²

2009

Information Systems Outsourcing

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“…A crucial requirement is to establish 'structured technological dialogue' that allows clients to specify requirements, and permits vendors to trace interdependencies and impacts on overall system performance (Monteverde and Teece, 1995). Thus, one key task of the offshore intermediary is to develop inter-firm social and intellectual capital (Nahapiet and Ghoshal, 1998;Miranda and Kavan, 2005) to create interfaces allowing for inter-firm knowledge identification, knowledge-sharing, and knowledge-combination across company and cultural boundaries.…”

Section: Introductionmentioning

confidence: 99%

Offshore Middlemen: Transnational Intermediation in Technology Sourcing

Mahnke

Wareham

Bjørn‐Andersen

2008

Journal of Information Technology

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The tendency of acquiring information systems and other high technology services from international suppliers continues at unprecedented levels. The primary motivation for the offshore sourcing of technology and services continues to be labor cost arbitrage, and secondly, access to higher levels of expertise. Yet paradoxically, large gaps in technical proficiency, cultural values, and communication styles between client and vendor can undermine the overall success of the offshore relationship. This paper argues that a new breed of entities have emerged, brokering or intermediating offshore relations. The capabilities of such 'middlemen' include moderating disparities in expertise, culture, and communication styles that often deteriorate performance in offshore relationships. The paper presents a preliminary theoretical justification for the emergence of offshore intermediaries, describes how and why they develop boundary spanning capabilities, and offers a case study as initial evidence substantiating the function and processes in intermediating transnational offshoring relationships. Our theory development concludes with propositions concerning four major offshore intermediary capabilities: (i) intermediating cultural distance, (ii) intermediating cognitive distance, (iii) pre-contractual preparation and negotiation, and (iv) post-contractual operational management.

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“…Although outsourcing motives might be multi-dimensional and should be considered cumulative rather than mutually exclusive, several studies indicate that there is a trade-off between achieving efficiency (cost and quality related) and strategic advantages (outlining strategic and transactional style) (DiRomualdo et al, 1998;Kogut and Zander, 1992;McLellan et al, 1995;Miranda and Kavan, 2005;Murillo-Zamorano, 2004;Priem, 2001;Weill and Broadbent, 1998). As outlined by Miranda and Kavan (2005), efficiency objectives are closely related to value capture (allocative efficiency) and strategic objectives are related to value creation (adaptive efficiency).…”

Section: Outsourcing Objectives and Successmentioning

confidence: 99%

“…As outlined by Miranda and Kavan (2005), efficiency objectives are closely related to value capture (allocative efficiency) and strategic objectives are related to value creation (adaptive efficiency). However, there is a trade-off between value creation and capture: achieving value capture makes the organizational environment more secure and efficient, but hinders innovative, knowledge-creation processes.…”

Section: Outsourcing Objectives and Successmentioning

confidence: 99%

“…Individually negotiated contracts can even help to achieve quality improvements or to create an appropriate environment to stipulate innovations (DiRomualdo et al, 1998;Miranda et al, 2005). In particular, annual renegotiation of service levels, requested volume of service and a bonus system can make the contract flexible enough to improve operations (DiRomualdo et al, 1998).…”

Section: Outsourcing Governancementioning

confidence: 99%

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