Contracting, incentives and inter-organizational routines in Information Technology outsourcing

Ramanath Subramanyam, Anjana Susarla

Research output: Contribution to conferencePaper

Abstract

Firms often use formal or explicit contracts as governance devices to administer, manage and coordinate market-based transactions such as outsourced information technology (IT) initiatives. While research in economics highlights the need to design contracts effectively to minimize hazards of opportunism and provide mutual incentives for the parties to fulfill their obligations, the role of knowledge exchange and protection in these client-vendor agreements and their implications for incentive alignment are not clear. In this paper, we analyze a sample of IT outsourcing contracts to investigate contract design, specifically the mechanisms adopted by firms to protect key knowledge assets that might be crucial to a firm's capabilities. We further examine how the incentive sharing mechanisms adopted by the client-vendor dyad reflects the knowledge asymmetries and knowledge exchange mechanisms that exist in the clientvendor relationship. Our findings help us test explanations from agency theory and arguments from prior knowledge-based research.

Original languageEnglish (US)
DOIs
StatePublished - 2007
Event67th Annual Meeting of the Academy of Management, AOM 2007 - Philadelphia, PA, United States
Duration: Aug 3 2007Aug 8 2007

Other

Other67th Annual Meeting of the Academy of Management, AOM 2007
CountryUnited States
CityPhiladelphia, PA
Period8/3/078/8/07

Keywords

  • Agency theory
  • IT outsourcing
  • Knowledge exchange

ASJC Scopus subject areas

  • Management Information Systems
  • Management of Technology and Innovation

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    Subramanyam, R., & Susarla, A. (2007). Contracting, incentives and inter-organizational routines in Information Technology outsourcing. Paper presented at 67th Annual Meeting of the Academy of Management, AOM 2007, Philadelphia, PA, United States. https://doi.org/10.5465/ambpp.2007.26508224