Strategic Implications of Information Technology for Resource and Capability Outsourcing Decisions

Abstract

Outsourcing generally involves non-strategic resources and/or non-asset specific capabilities. However, in this paper, the authors examine the non-traditional, but increasingly more common, use of IT to facilitate theoretically inconsistent outsourcing decisions involving core resources and capabilities. The authors reconcile theory with practice by developing propositions to explain how IT can enable such outsourcing decisions and how performance advantages may ensue. The authors develop a finer-grained perspective of the constructs of knowledge-based resources and capabilities. The paper concludes with a discussion arguing that such IT-enabled outsourcing decisions, if implemented correctly, can provide an organization with both capability advantages and cost benefits, resulting in higher performance.