Outsourcing of IT and Absorptive Capacity: A Multiple Case Study in the Brazilian Insurance Sector

Valter Moreno,Claudio Pitassi,Marcello Coelho

doi:10.15728/bbr.2020.17.1.5

Abstract

Sources of external knowledge are critical to the implementation of strategies to achieve innovation, especially in the case of information technology. The concept of absorptive capacity reflects the ability of firms to obtain, assimilate, combine, and extract advantages from external knowledge to generate innovations. The objective of this multiple case study was to investigate how outsourcing of IT can influence the absorptive and innovative capacity of organizations, focused on the insurance sector. The results of comparing four insurers with different degrees of innovation and adoption of IT outsourcing indicate that the connections between the strategy of relationship with suppliers and the stance of the IT area of the cliente company, and its previous activity and level of knowledge, are essential to determine the absorptive and innovative capacity. Besides this, companies that neglect outsourcing of IT to leverage their absorptive and innovative capacity can suffer significant harm regarding the use of resources, agility, and competitiveness.

Highlights

Information technology (IT) is a critical factor for the development of innovations in the insurance ecosystem, as revealed by the emergence of insurtechs (Cappiello, 2018)
We investigated four insurance companies in Brazil, with the objective of understanding how and under what conditions the outsourcing of IT can influence the absorptive capacity of organizations, and their innovative capacity
In the four cases investigated, the same mechanisms for access to new knowledge, namely: participation in congresses and other events in the insurance and IT sectors; contracting presentations and workshops; forming relationships with consultants that study the strategic directions of the insurance sector; and analysis of reports of trends in the insurance and IT markets, such as the annual report of the company Gartner

Summary

Introduction

Information technology (IT) is a critical factor for the development of innovations in the insurance ecosystem, as revealed by the emergence of insurtechs (Cappiello, 2018). These innovations are potent accelerators of diversification of the offer of new products, increased competitiveness and better pricing, among other aspects, generating potential benefits for insurers and insureds alike. With the development of new digital technologies (e.g., cloud computing, artificial intelligence, machine learning, IoT), the opportunities to outsource IT are increasing, including through the formation of strategic partnerships with suppliers of these services (David et al, 2018; Overby, 2017)

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Results

Discussion

Conclusion