Use of Transaction Cost Economics to Study Information Technology Outsourcing: Over-Application or Under-Theorizing?

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

“…David and Han [14] found over 2000 articles with the key words TRANSACTION* COST*. Although some articles did not apply TCE, they and the study of [27] give an idea of how widely TCE is applied in various fields of research. David and Han noticed that empirical statistical testing had been applied only in 63 articles.…”

“…Qualitative and quantitative studies have both provided mixed results on the applicability of TCE. Difficulties with the operationalization of the TCE concepts as suggested by Nagpal [27] is one possible reason. Third, the outsourcing contract -the formal presentation of governance structure [36] -is a critical element in securing outsourcing success.…”