The Impact of Human Asset Specificity on the Sourcing of Application Services

Dibbern, Jens; Chin, Wynne Wong; Heinzl, Armin Horst (May 2005). The Impact of Human Asset Specificity on the Sourcing of Application Services. Proceedings of the 13th European Conference of Information Systems.

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The question concerning the circumstances under which it is advantageous for a company to outsource certain information systems functions has been a controversial issue for the last decade. While opponents emphasize the risks of outsourcing based on the loss of strategic potentials and increased transaction costs, proponents emphasize the strategic benefits of outsourcing and high potentials of cost-savings. This paper brings together both views by examining the conditions under which both the strategic potentials as well as savings in production and transaction costs of developing and maintaining software applications can better be achieved in-house as opposed to by an external vendor. We develop a theoretical framework from three complementary theories and test it empirically based on a mail survey of 139 German companies. The results show that insourcing is more cost efficient and advantageous in creating strategic benefits through IS if the provision of application services requires a high amount of firm specific human assets. These relationships, however, are partially moderated by differences in the trustworthiness and intrinsic motivation of internal versus external IS professionals. Moreover, capital shares with an external vendor can lower the risk of high transaction costs as well the risk of loosing the strategic opportunities of an IS.

Item Type:

Conference or Workshop Item (Paper)

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Business Management > Institute of Information Systems
03 Faculty of Business, Economics and Social Sciences > Department of Business Management > Institute of Information Systems > Information Engineering

UniBE Contributor:

Dibbern, Jens; Chin, Wynne Wong and Heinzl, Armin Horst

Subjects:

000 Computer science, knowledge & systems
300 Social sciences, sociology & anthropology > 330 Economics
600 Technology > 650 Management & public relations

Language:

English

Submitter:

Nicole Buys

Date Deposited:

20 Apr 2016 09:01

Last Modified:

12 Sep 2017 19:07

BORIS DOI:

10.7892/boris.79104

URI:

https://boris.unibe.ch/id/eprint/79104

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