Abstract :
The conventional benefits (i.e., cost reduction, the ability to focus on core competence, technological leadership, etc) and risks (i.e., vendor opportunism, lock-ins, contractual difficulties, etc) of IT outsourcing are extensively documented in the literature. Nevertheless, as IT outsourcing has become a pervasive organizational phenomenon, the greater part of its driving and constraining forces should be understood in a larger organizational context. This study provides new insight into the broader organizational factors, namely firm uncertainty, agency risk, firm innovativeness and IT intensity, that may influence a firm´s propensity to outsource IT. The results suggest that firm uncertainty and agency risks negatively affect a firm´s outsourcing decisions, while a positive association is observed between a firm´s innovativeness (measured by R&D intensity) and IT outsourcing propensity. Our study serves as a fresh vantage point from which to explore new opportunities and challenges of IT outsourcing, going beyond the traditional studies that use financial characteristics as its primary determinants.
