Transaction Cost Economics on trial again: A commentary on “The Role of Transaction Cost Economics in Information Technology Outsourcing Research: A Meta-Analysis of the Choice of Contract Type”

2016 ◽  
Vol 25 (1) ◽  
pp. 49-56 ◽  
Author(s):  
Mary C. Lacity ◽  
Shaji A. Khan
Keyword(s):  
Information Technology ◽  
Transaction Cost ◽  
Transaction Cost Economics ◽  
Meta Analysis ◽  
Contract Type ◽  
Information Technology Outsourcing

The contract-type choice for short-term software development outsourcing: The role of behaviour-based formal control

2020 ◽  
pp. 026839622096766
Author(s):  
Cornelia Gaebert ◽  
Karlheinz Kautz
Keyword(s):  
Software Development ◽  
Transaction Cost ◽  
Transaction Cost Economics ◽  
It Outsourcing ◽  
Short Term ◽  
Term Contract ◽  
Short Term Contract ◽  
Contract Type ◽  
Software Development Outsourcing

With this article, we contribute to the recent debate regarding the role of transaction cost economics in IT outsourcing and software development outsourcing research. Our focus is on the contract-type choice for short-term software development outsourcing. For this purpose, we critically examine transaction cost economics and the extant IT outsourcing/software development outsourcing literature and propose a framework which classifies software development outsourcing transactions according to transaction frequency and transaction investment characteristics. The framework identifies short-term software development outsourcing as an occasional, idiosyncratic transaction. Based on this groundwork, we clarify the concept of short-term contract and put forward that such a transaction is governed by a short-term contract. Following transaction cost economics and control theory, our resulting theoretical considerations infer that for short-term software development outsourcing, the vendor’s high human asset specificity and the resulting behaviour-based outcome control, the monitoring of the developer staff, are the triggers for contract-type decisions. Accordingly, staff monitoring by the client should result in Time & Material contracts, whereas staff monitoring by the vendor should result in Fixed Price contracts. We develop corresponding hypotheses which we test with 468 specific contract records for short-term software development outsourcing. The results confirm the transaction cost economics–based recommendations for contract-type choice. We therefore conclude that the advice of the transaction cost economics to use certain governance structures according to transaction attributes is also applicable to IT outsourcing/software development outsourcing transactions. We suggest further exploration of specific contract records to substantiate our results.

A Multiple Case Study on the Nature and Management of Shadow Information Technology

2016 ◽  
Vol 31 (1) ◽  
pp. 79-101 ◽  
Author(s):  
Stephan Zimmermann ◽  
Christopher Rentrop ◽  
Carsten Felden
Keyword(s):  
Information Technology ◽  
Transaction Cost Economics ◽  
Multiple Case Study ◽  
End User ◽  
It Department ◽  
Multiple Case ◽  
It Departments ◽  
Shadow It

ABSTRACT In several organizations, business workgroups autonomously implement information technology (IT) outside the purview of the IT department. Shadow IT, evolving as a type of workaround from nontransparent and unapproved end-user computing (EUC), is a term used to refer to this phenomenon, which challenges norms relative to IT controllability. This report describes shadow IT based on case studies of three companies and investigates its management. In 62 percent of cases, companies decided to reengineer detected instances or reallocate related subtasks to their IT department. Considerations of risks and transaction cost economics with regard to specificity, uncertainty, and scope explain these actions and the resulting coordination of IT responsibilities between the business workgroups and IT departments. This turns shadow IT into controlled business-managed IT activities and enhances EUC management. The results contribute to the governance of IT task responsibilities and provide a way to formalize the role of workarounds in business workgroups.

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