Researching IT multi-sourcing and opportunistic behavior in conditions of uncertainty: A case approach

Abstract

Multi-sourcing arrangements are a major trend in the contemporary outsourcing landscape, but our understanding of what makes these complex ventures effective remains relatively fragmented. Our study focuses on the multi-sourcing and opportunistic behavior of service providers, and in particular a relatively neglected but major driver of opportunistic behavior, namely the uncertainty surrounding the transaction. Developing an extended transaction cost economics perspective, our investigation focuses on the roles of internal and behavioral uncertainty and the occurrence of opportunistic behavior. We research a rich multi-sourcing case study within the financial services sector and compare and re-analyze a detailed case in the literature. According to our findings, internal uncertainty creates an ‘alignment of actions’ problem between outsourcing partners, while behavioral uncertainty can shape an ‘alignment of objectives’ problem, leading to the occurrence of opportunistic behavior. Our findings further contribute to a more thorough understanding of ways to reduce these uncertainties and facilitate coopetition between multiple vendors.