Is Transaction Cost Economics Theory Able to Explain Contracts Used for and Success of Firm-Wide IT-Infrastructure Outsourcing?

Nyrhinen, Mari; Dahlberg, Tomi

doi:10.1109/hicss.2007.302

Cited by 9 publications

(9 citation statements)

References 29 publications

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“…Transaction costs in FA offshore Nyrhinen and Dahlberg (2007) applied two TCE attributes: asset specificity and frequency to characterise IT infrastructure services and to indicate what type of outsourcing contracts should be concluded. They classified outsourcing contracts of 213 enterprises to determine if TCE contracting recommendations were followed, and if outsourcing succeeded better when the contract type matched the IT infrastructure service characteristics.…”

Section: Transaction Cost Economics (Tce)mentioning

confidence: 99%

“…Previous studies extend TCE with incomplete contract theories (Aubert et al, 1996(Aubert et al, , 2004Nyrhinen and Dahlberg, 2007), differentiation of relative transaction costs incurred by small and large firms (Carmel and Nicholson, 2005), social exchange theory (Whitten and Leidner, 2006) and management control (Nicholson et al, 2006). TCE has been used to understand the decision to outsource and ways to minimise transactions costs in outsourcing.…”

Section: Theoretical Frameworkmentioning

confidence: 99%

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Transaction costs in finance and accounting offshore outsourcing: a case of Malaysia

Aman

Hamzah

Amiruddin

et al. 2012

Strategic Outsourcing: An International Journal

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Purpose -Finance and accounting (FA) offshore outsourcing is a growing trend involving a relocation of business processes to Asia but only few studies focus on understanding the issues that underlie the relocation of FA services. This paper aims to provide understanding of transaction costs economics (TCE) issues in FA offshore outsourcing using a case study of the Malaysia outsourcing industry which is growing and experiencing significant change. Design/methodology/approach -This study uses a qualitative case study approach. Interviews cover several foreign firms, which are based in Malaysia and involved in FA offshore outsourcing services worldwide. Interviews also include related regulatory bodies in Malaysia. Findings -Using TCE and management control theoretical framework, findings indicate issues and challenges faced by the firms and the need for contract management skills to mitigate the issues. Research limitations/implications -This study is limited to a broad discussion of FA offshore outsourcing, TCE and contract management but it could be a basis for future studies on specific issues of managing attrition in FA offshore outsourcing. This study contributes to prior works in TCE and FA offshore outsourcing by establishing controls to minimise costs at contact, contract and control stage. Specifically, this study emphasises contract management such as negotiating contract and using long-term contractual arrangement.Practical implications -This study not only identifies TCE issues in offshore FA outsourcing, but also provides suggestions for minimising transaction costs. For example, firms should consider the type of transaction costs involved and plan for appropriate contract management to mitigate the costs. Originality/value -There is no study yet that discusses in-depth the issues of TCE in FA offshore outsourcing especially in Malaysia and the need for contract management in mitigating such issues.

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Section: Transaction Cost Economics (Tce)mentioning

confidence: 99%

Section: Theoretical Frameworkmentioning

confidence: 99%

Transaction costs in finance and accounting offshore outsourcing: a case of Malaysia

Aman

Hamzah

Amiruddin

et al. 2012

Strategic Outsourcing: An International Journal

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“…Empirical research has, however, produced mixed results [e.g. 4,41]. For some time ISD outsourcing was a hype term and a management fashion [1,35], which led some organizations to place unrealistic expectations.…”

Section: From Isd Outsourcing To Backsourcingmentioning

confidence: 99%

The Usefulness of the Recommendations Regarding the Information System Development Method Selection during the Era of Digitalization

Dahlberg

Lagstedt²

2019

Proceedings of the Annual Hawaii International Conference on System Sciences

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The business criticality of information systems (IS) and their development (ISD) appear to have increased recently. Backsourcing, cosourcing and multisourcing of ISD are some of the consequences. They, in turn, extend the need for understanding how to select information systems development methods (ISDM). In this research, we first condensed the knowledge base of ISDM selection research into nine recommendations. We then interviewed 28 ISDM experts and asked them to evaluate how useful the extant ISDM selection recommendations of prior research are to IS user organizations. We discovered that most recommendations were perceived outdated and only limitedly useful. We finally contemplated that paying more attention to how ISDMs are used in business development contexts is a means to increase the usefulness of ISDM selection recommendations.

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“…It was clearly evident that networks and telecommunications services (Item 16, 8 and 14) are ranked first, third and fourth, respectively, as the most outsourced ICT functions by the surveyed manufacturers. The networks and telecommunications services appear to be highly standardized and thus favor outsourcing (Nyrhinen and Dahlberg, 2007). Furthermore, it has been identified by Malaysian Communications and Multimedia Commission (MCMC) in December 2015 that network strategists and network engineers are the critical job role most difficult to hire in Malaysia.…”

Section: Descriptive Analysismentioning

confidence: 99%

Determinants of ICT outsourcing among the locally-owned manufacturers in Malaysia

Yap

Lim

Jalaludin

et al. 2016

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Purpose This paper aims to examine the level of information and communication technology (ICT) outsourcing and its determinants in the Malaysian locally owned manufacturing firms. Drawing on the transaction cost theory and the resource-based theory, four determinants – asset specificity, uncertainty, business skills and technical skills – were hypothesized to influence ICT outsourcing. Design/methodology/approach Data were collected using a questionnaire survey from 104 manufacturing firms listed on the Directory of Federation of Malaysian Manufacturers. Data were then analyzed using R package partial least squares path modeling. Findings The study reveals that slightly over two-thirds (68 per cent) of the surveyed manufacturers either fully or partially outsourced their ICT services. Asset specificity and uncertainty are found to be positively related to the level of ICT outsourcing, which contradict the prediction of the transaction cost theory. On the other hand, business skills and technical skills are not significantly related to the level of ICT outsourcing, which also conflict the resource-based arguments. Research limitations/implications The small sample size would not be able to make meaningful conclusion for the population; the small R2 value indicates that other important determinants of ICT outsourcing were not tested in this study, and the transaction cost theory and the resource-based theory do not adequately predict the level of ICT outsourcing in the Malaysian locally owned manufacturers. Originality/value The study serves as one of the first studies that tested the determinants of ICT outsourcing using the transaction cost theory and the resource-based theory in locally owned manufacturing firms of a developing country.

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Is Transaction Cost Economics Theory Able to Explain Contracts Used for and Success of Firm-Wide IT-Infrastructure Outsourcing?

Cited by 9 publications

References 29 publications

Transaction costs in finance and accounting offshore outsourcing: a case of Malaysia

Transaction costs in finance and accounting offshore outsourcing: a case of Malaysia

The Usefulness of the Recommendations Regarding the Information System Development Method Selection during the Era of Digitalization

Determinants of ICT outsourcing among the locally-owned manufacturers in Malaysia

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