A Resource-based view of IT Outsourcing: Knowledge Sharing, Communication, and Coupling Quality

Abstract

Information processing capabilities have become one of the most critical resources that modern firms are vying with each other for the lead. IT outsourcing serves as an express route for firms to gain access to external IT resources for competitive advantages. IT outsourcing arrangements between outsourcer and technology provider are increasingly characterized as interfirm partnerships rather than arm's length transactions. Participants exchange data, information, and resources for mutual prosperity in the strategic inter-organizational governance structure. Yet, no explicit causal models exist to explain how IT resources are exchanged. In this article, we develop a theoretical model of IT outsourcing, drawing from a resource-based view of the firm. We identify three constructs-knowledge sharing, communication, and coupling quality, in the process of transferring various types of IT resources. Hypotheses are derived from this model and tested with empirical data gathered from top 1000 firms of Taiwan. The proposed model provides a valuable tool for managing lT-related strategic alliances. Managerial implications are discussed.