IT Outsourcing Governance - Client Types and Their Management Strategies

Foreword

Acknowledgements

Abstract

Table of Contents

List of Figures

List of Tables

List of Abbreviations

1 Introduction

1.1 Problem Statement and Motivation for this Research

1.2 Research Objective and Research Questions

1.3 Outline and Structure of the Thesis

2 Epistemological Foundation and Research Methodology

2.1 Philosophical Perspectives and Research Epistemology

2.1.1 Positivist Research

2.1.2 Interpretive Research

2.1.3 Critical Research

2.2 Research Design and Methods: Quantitative vs. Qualitative Research

2.3 Summary of Epistemological Foundations of this Thesis

3 Theoretical Background on Outsourcing

3.1 Definition and Background of Information Systems Outsourcing

3.1.1 Specific Characteristics of Information Systems Outsourcing

3.1.2 IS Outsourcing Definitions

3.2 Theoretical Foundation: Related Theories

3.2.1 Transaction Cost Economics

3.2.2 Exchange Theories: Social Exchange and Relational Exchange Theory

3.2.2.1 Social Exchange Theory

3.2.2.2 Relational Exchange Theory

3.2.3 Psychological Contract Theory

3.2.4 Expectation Confirmation Theory

3.2.5 Theories of Power: Power-Political, Power Dependence, Power Conflict

3.2.6 Summary of Theories for IS Outsourcing Relationships

3.3 The Multi-Dimensionality of Outsourcing IS Functions

3.3.1 Outsourcing Functions and the IT Service Lifecycle

3.3.2 Forms of Outsourcing Arrangements

3.4 Outsourcing Determinants and Expectations: Advantages and Disadvantages

3.5 Prior Research on IS Outsourcing Relationships: State of the Art

3.5.1 Evolution of IS Outsourcing Research towards a Relationship Focus

3.5.2 The Relationship Perspective in IS Outsourcing

3.5.3 Approaches for Classifying IS Outsourcing Relationships

3.6 Constitutive Factors of an IS Outsourcing Relationship

3.6.1 Strategic Intent and Contextual Factors

3.6.2 Relationship Architecture

3.6.3 Governance and Monitoring Mechanisms

3.6.3.1 Formal Contractual Governance

3.6.3.2 Informal Relational Governance

3.6.3.3 The Interplay of Formal Contractual and Informal Relational Governance

3.6.3.4 Governance via Management Processes

3.6.3.5 Governance via Organizational Structures

3.6.3.6 Governance via Experience and Risk-Reward Incentive Mechanisms

3.6.4 Relational and Behavioral Interactions of the Outsourcing Parties

3.6.5 Success of IS Outsourcing

3.7 Shortcomings of the Current Research / Research Gap on Outsourcing Relationships and their Governance

3.8 Framework for Classifying Outsourcing Relationships

3.8.1 Methodological Approach to the Conceptualization of a Framework on Outsourcing Relationships

3.8.2 Categories of the Framework

3.8.3 Completeness vs. Parsimony of the Building Blocks

3.8.4 Interdependencies among the Variables

3.8.5 Conceptual Framework for Types in IS Outsourcing Relationships

3.9 Summary of Outsourcing Foundations

4 Theoretical and Methodological Foundations for Classifying Data

4.1 Theoretical Foundations of Classification and Configuration

4.1.1 Definition of Classification Terms: Classification, Configuration, Type

4.1.2 Characteristics of Configurations or Types

4.1.3 Typologies vs. Taxonomies

4.2 Grouping Techniques

4.2.1 Cluster Analysis

4.2.1.1 Definition of Cluster Analysis

4.2.1.2 General Procedure of Cluster Analysis

4.2.1.3 Different Clustering Techniques and Algorithms

4.2.1.4 Clustering Steps

4.2.1.5 Strengths and Pitfalls of Cluster Analysis

4.2.2 Discriminant Analysis

4.2.3 Factor Analysis

4.2.3.1 General Considerations and Distinctions in Factor Analysis: Exploratory vs. Confirmatory, R vs. Q Analysis

4.2.3.2 Design and Process of a Factor Analysis

4.3 Summary of the Methodological Foundations for Classifying Outsourcing Clients

5 Empirical Evidence of Outsourcing Relationship Types

5.1 Qualitative Pre-Study: First Evidence of Different IS Outsourcing Relationships

5.1.1 Data Collection

5.1.2 Results

5.1.2.1 Strategic Intent, Expectations, and Context

5.1.2.2 Relationship Architecture

5.1.2.3 Governance and Monitoring

5.1.2.4 Interaction

5.1.3 Types of IS Outsourcing Relationships

5.2 Research Design of the Quantitative Study

5.3 Data Collection and Demographic Results

5.4 Statistical Results: Data Analysis

5.4.1 Diagnostic Pre-Analysis of Results: Missing Values and Distribution of Data

5.4.1.1 Diagnostics: Analyzing the Extent and Impact of Missing Values

5.4.1.2 Normal Distribution of the Data

5.4.2 Factor Analysis: Customer Expectations towards IS Outsourcing

5.4.2.1 Initial Factor Analysis with All Outsourcing Motives

5.4.2.2 Final Improved Factor Solution

5.4.2.3 Reliability Analysis of the Final Factor Solution

5.4.2.4 Interpretation of Factors

5.4.3 Cluster Analysis: Finding Configurations of Clients with Similar Outsourcing Expectations

5.4.3.1 Selecting and Preparing the Input Variables for the Cluster Analysis

5.4.3.2 Identifying Outliers in the Data Set

5.4.3.3 Identifying the Number of Clusters and the Cluster Centroids

5.4.3.4 Optimizing the Cluster Solution with k-Means

5.4.3.5 Estimating and Validating the Cluster Solution with Discriminant Analysis

5.5 Interpretation of Statistical Analysis: Configurations of Different Outsourcing Client Groups

5.5.1 Constitutive Elements of the Client Configurations: Major Outsourcing Expecta-tions and Strategic Intents

5.5.2 Context Factors

5.5.2.1 Basic Company Characteristics

5.5.2.2 Role and Impact of IT for the Company

5.5.3 Relational Architecture of the Outsourcing Ventures

5.5.3.1 Experience with Outsourcing

5.5.3.2 Outsourcing Objects and Degree of Outsourced Functions

5.5.3.3 Number of Involved Vendors: Single vs. Multi-Vendor Outsourcing

5.5.3.4 Outsourcing Degree: Selective vs. Total Outsourcing

5.5.3.5 Length and Duration of Outsourcing Contracts

5.5.3.6 Pricing Arrangements for Outsourced Services

5.5.3.7 Outsourcing Alliances

5.5.3.8 Dependency on the Service Provider and Switching Costs

5.5.3.9 Goal Alignment between Outsourcing Parties

5.5.4 Governance Approaches among the Different Client Groups

5.5.4.1 Outsourcing Governance: Role of the Contract

5.5.4.2 Outsourcing Governance: Role of Processes

5.5.4.3 Outsourcing Governance: Role of Structures and Structural Liaison Devices

5.5.4.4 Outsourcing Governance: Informal Relationship

5.5.4.5 The Role of Staff Experience, Degrees of Freedom for the Vendor, and Risk-Reward Mechanisms as Governance Mechanisms

5.5.5 Interactions: Role of Specific Relationship Factors

5.5.5.1 Communication

5.5.5.2 Conflict Resolution and Consensus

5.5.5.3 Cooperation and Coordination

5.5.5.4 Commitment and Loyalty

5.5.5.5 Cultural Similarity

5.5.5.6 Trust

5.5.5.7 Vendor Flexibility

5.5.5.8 Vendor Proactivity

5.5.6 Outsourcing Success: Perceived Service Quality and Satisfaction

5.6 Summary and Consolidated Description of the Four Client Configurations

6 Governance of IS Outsourcing Relationship Types

6.1 Research Design: Governance Model and Construct Development

6.2 Research Approach and Validation

6.3 Model Validation and Results

6.3.1 Formative Measurement Model

6.3.2 Reflective Measurement Model

6.3.3 Structural Model

6.3.4 Group Analysis: The Impact of Different Governance Mechanisms among the Four Client Groups

6.3.5 Mediating Effects in the Model

6.4 Assessment of Common Method Bias

6.5 Discussion and Interpretation of Results

7 Conclusion and Outlook on Future Research

7.1 Results and Contributions to Theory

7.2 Results and Contributions to Practice

7.3 Main Research Limitations

7.4 Outlook on Future Research

References

Appendix