Success of IT outsourcing contracts: Effects of the complexity of the activity, relational governance and structure of incentives

Otavio P. Sanchez, Marcelo A. Cruz, Paulo B. Goes

Research output: Contribution to conferencePaper

2 Scopus citations

Abstract

The outsourcing of Information Technology (IT) services is a practice generally regulated by contracts. Since contracts are inevitably incomplete, buyer-supplier relationships are usually managed by additional mechanisms of incentives and governance, which results in a variety of success levels. Buyer perceived volatility and ambiguity of the future relationship are argued to be keys in defining the balance of contract design. A model to predict supplier behavior and perceived contract success is proposed by interrelating outsourced activity complexity, relational governance and structure of formal incentives. Results of empirical data show the proposed variables are good predictors of supplier's behavior and expectation of success of the contracts. This research makes a contribution by clarifying how to better design contracts and how relationships between buyer and supplier can be managed to achieve higher levels of success.

Original languageEnglish (US)
StatePublished - Jan 1 2014
Event35th International Conference on Information Systems: Building a Better World Through Information Systems, ICIS 2014 - Auckland, New Zealand
Duration: Dec 14 2014Dec 17 2014

Other

Other35th International Conference on Information Systems: Building a Better World Through Information Systems, ICIS 2014
CountryNew Zealand
CityAuckland
Period12/14/1412/17/14

Keywords

  • Contracting
  • IT governance
  • Outsourcing

ASJC Scopus subject areas

  • Information Systems
  • Computer Science Applications

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    Sanchez, O. P., Cruz, M. A., & Goes, P. B. (2014). Success of IT outsourcing contracts: Effects of the complexity of the activity, relational governance and structure of incentives. Paper presented at 35th International Conference on Information Systems: Building a Better World Through Information Systems, ICIS 2014, Auckland, New Zealand.