Chang, Young Bong, and Vijay Gurbaxani (2012) “Information technology outsourcing, knowledge transfer, and firm productivity: An empirical analysis.”MIS Quarterly 36.4 (2012): 1043-1053.
Our study has important implications for practice. We demonstrate that IT outsourcing does lead to productivity gains for firms that select this mode of service delivery. Our results also suggest that IT-related knowledge held by IT services vendors enables these productivity gains, the magnitude of which is moderated by a firm’s IT intensity. Moreover, the value of outsourcing to a client firm increases with its propensity for outsourcing, which in turn depends on firm-specific attributes including efficiency level, financial leverage, and variability in business conditions. We show that IT outsourcing is a valuable delivery option, but not for all firms. Client firms must assess potential service providers not just using the traditional criteria of price and service levels, but also their knowledge capabilities. In addition, client firms must focus on building in-house assets that complement the provider’s capabilities.
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