A growing trend to simultaneously insource and outsource the same information technology (IT) activities (Òconcurrent IT sourcingÓ) has not yet received research attention. Although it is widespread and recent empirical studies have detected that in-house IT can complement IT outsourcing, when and how concurrent IT sourcing pays off is not yet understood. This study introduces the notion of concurrent IT sourcing. It then develops two interrelated ideas: concurrent IT sourcing simultaneously enhances in-house and outsourced IT performance: (a) via distinctive mechanisms, but (b) only when vendors' IT capabilities complement the client's. Econometric tests using survey data from 233 firms support these ideas. Our novel contribution is to explain when and how concurrent IT sourcing enhances a client firm's inhouse and outsourced IT performance. The explanatory mechanisms for outsourced IT performance are socialization and modeling of clients' in-house IT practices by vendors; for in-house IT performance they are knowledge spillovers and ratcheting. For practice, our study shows that when a firm's in-house capabilities complement its IT vendors' capabilities, firms can simultaneously outsource and insource the same IT activities to enhance both in-house and outsourced IT performance. > >
Intraplatform competition has received scant attention in prior studies, which predominantly study interplatform competition. We develop a middle-range theory of how complementarity between input control and a platform extension's modularizationÑby inducing evolutionÑinfluences its performance in a platform market. Primary and archival data spanning five years from 342 Firefox extensions show that such complementarity fosters performance by accelerating an extension's perpetual evolution.
We explore how ÒRed QueenÓ competition is increasing the competitive premium on ÒevolvableÓ information systems (IS). Ephemeral market advantage coupled with relentless innovation spawning trends such as the Internet-of-Things and additive manufacturing are amplifying the importance of evolvable systems across all industries. We discuss uncharted theoretical and empirical territory for IS research on evolvable systems. The elusiveness of some of these phenomena to other disciplines offers a unique opportunity for IS scholars.
The information technology (IT) governance literature predominantly explains firms' IT governance choices , but not their strategic consequences. We develop the idea that a firm's IT governance choices induce adeptness at strategically exploiting IT only when they are discriminatingly aligned with its departments' knowledge outside their specialty. Discriminating means that governing the two undertheorized classes of IT assetsÑapps and infrastructureÑrequires ÒperipheralÓ knowledge in different departments. Analyses of data from 105 firms support our middle-range theory.
Platform desertion, or a developer's stopping the development of an app for a platform, is a widespread phenomenon to the detriment of platforms. However, the extant literature focuses primarily on why app developers joinÑnot leaveÑa platform. This app-level study develops two ideas: (a) coordination costs borne by an app's developer are associated with platform desertion, and (b) these costs are, in turn, shaped by a nuanced interplay between app decision rights and app ÒmicroarchitectureÓ introduced here. We use survey and snapshot archival data spanning 2009Ð2014 on over 300 apps in the Mozilla Firefox ecosystem to test these ideas. Our novel contribution shows how, by influencing coordination costs, the previously invisible interplay between app decision rights and app microarchitecture shapes an app's platform desertion. We find that delegating app decision rights to its developer weakens the coordination cost-reducing benefits of decoupling an app from the platform but strengthens those of standardizing its interfaces to the platform. The key theoretical implication is that app decision rights and app microarchitecture symbiotically influence the coordination costs borne by an app's developer. The key practical implication for platform designers is that the choices about who ought to make what decisions are intertwined with the architecture of the governed information technology artifact. > >
Recent work has shown that a firm's plural sourcing strategy, which determines how much it chooses to make versus how much it chooses to buy, requires consideration of the complementarities and constraints that affect the differential advantages of making and buying. Elaborating on this perspective, we theorize how (mis)fit between a firm's plural sourcing strategy of simultaneously making and buying and its development of information technology (IT) enabled interfirm and intrafirm process integration capabilities influences firm performance in deregulated markets. We position our theory development and empirical tests in the context of the power-generation segment of the U.S. electric utility industry (EUI), an asset-intensive industry that has been deregulated to promote the separation of key value chain activities (i.e., generation, transmission, and distribution) and the development of wholesale energy markets. We draw on the transaction cost economics, coordination costs, and IT capabilities perspectives to theorize that a firm achieves fit (realizing performance benefits) by increasing market sourcing intensity (MSI)Ñor, how much it buys relative to how much it makesÑ and developing IT-enabled interfirm process integration capability for external coordination with the market, or misfit (realizing performance penalties) by increasing MSI and developing IT-enabled intrafirm process integration capability for coordinating internal production. We collated data from archival sources for 342 utility firms in the power-generation segment to construct a panel dataset for the period 1994Ð2004 on (1) firms' MSI from wholesale electricity markets, (2) firms' IT investment decisions to develop interfirm and intrafirm process integration capabilities, (3) measures of firm performance, and (4) several control variables related to exogenous shocks (i.e., regulatory change, oil crisis), region of operation, and firm-level factors. Our results suggest that fit between MSI and the development of IT-enabled interfirm process integration capability improves firm profitability, assessed by return on assets, and misfit between MSI and the development of IT-enabled intrafirm process integration capability extracts penalties in firm profitability. We also find evidence that fit between MSI and the development of IT-enabled interfirm process integration capability improves market valuation, assessed by Tobin's Q, and asset turnover, assessed by operating revenue/total assets. We discuss the implications of our findings for the development of IT capabilities to accompany a firm's plural sourcing strategy and the literature on IT business value.
Recent research emphasizing the need for more business knowledge in information technology (IT) units and more technical knowledge in line functions largely overlooks the question of when maintaining either form of such "peripheral" knowledge-a costly endeavor-is valuable. Further application and process novelty are increasingly unavoidable in systems development projects but remain largely overlooked in theory. It is plausible that one type of peripheral knowledge is valuable under one type of novelty but not the other.I develop the idea that discriminating alignment between project novelty and peripheral knowledge is needed for them to enhance systems development performance. Thus, the valuable type of peripheral knowledge depends on whether a project involves novelty in the project concept or in its development processes. Further, we lack an explanation for how such discriminating alignment translates into improved project performance. I develop and test a middle-range theory built around two ideas to address these gaps. First, alignment between project novelty and peripheral knowledge must be discriminating to enhance systems development performance. Second, such discriminating alignment accelerates design convergence, which in turn enhances systems development performance. Tests using data from 159 projects support the proposed ideas. The primary contribution of this paper is therefore explaining when and how alignment between project novelty and peripheral knowledge in IT and client departments enhances systems development performance. The key implication is that greater application domain knowledge in the IT unit (technical knowledge in the client department) enhances performance in projects involving greater application novelty (process novelty).
This study addresses the theoretically neglected interplay between organizational information technology (IT) architecture and IT governance structure in shaping IT alignment. We theoretically develop the idea that IT architecture modularity helps sustain IT alignment by increasing IT agility, and that decentralization of IT governance strengthens this relationship. IT architecture therefore complements IT governance structure. Tests of the proposed mediated-moderation model using data from 223 organizations support these ideas. Implications for theory and practice are also discussed.
The emergence of software-based platforms is shifting competition toward platform-centric ecosystems, although this phenomenon has not received much attention in information systems research. Our premise is that the coevolution of the design, governance, and environmental dynamics of such ecosystems influences how they evolve. We present a framework for understanding platform-based ecosystems and discuss five broad research questions that present significant research opportunities for contributing homegrown theory about their evolutionary dynamics to the information systems discipline and distinctive information technology-artifact-centric contributions to the strategy, economics, and software engineering reference disciplines.
Although formal and informal control mechanisms are often simultaneously used to govern systems development projects, considerable disagreement exists about whether the use of one strengthens or diminishes the benefits of the other. In other words, are they complements or substitutes? Competing theoretical perspectives favor both sides of the argument, and neither the information systems (IS) controls literature nor the information technology (IT) outsourcing literature has addressed this issue. This study theoretically develops the idea that these competing perspectives are mutually compatible rather than contradictory because informal and formal control mechanisms can simultaneously be complements and substitutes. Using data from 120 outsourced systems development projects, it is shown that informal control mechanisms strengthen the influence of formal behavior control mechanisms on systems development ambidexterity (complementary effects) but weaken the influence of formal outcome control mechanisms (substitutive effects). The key contribution of the paper therefore lies in exploring interactions among control mechanisms in a project's control portfolio to reconcile the competing theoretical perspectives on whether formal and informal controls are complements or substitutes. The findings provide managers guidance on how to carefully combine formal and informal control mechanisms in a project. Combining informal with formal process-based control mechanisms can simultaneously enhance the fulfillment of project goals and development flexibility. However, combining informal with formal outcome-based control mechanisms can instead impair these objectives.
This study addresses the theoretically underexplored question of how fit between project governance configurations, and the knowledge of specialized information technology (IT) and client departments, influences information systems development (ISD) performance. It conceptualizes project governance configurations using two classes of project decisions rights—decision control rights and decision management rights. The paper then develops a middle-range theory of how governance-knowledge fit shapes ISD performance by influencing the effective exercise of these decision rights during the development process. Further, the two dimensions of ISD performance—efficiency and effectiveness—are shaped by different classes of project decision rights. Data from 89 projects in 89 firms strongly support the proposed ideas. Implications for theory and practice are also discussed.
Although the choice of control mechanisms in systems development projects has been extensively studied in prior research, differences in such choices across internal and outsourced projects and their effects on systems development performance have not received much attention. This study attempts to address this gap using data on 57 outsourced and 79 internal projects in 136 organizations. Our results reveal a paradoxical overarching pattern: controllers attempt greater use of control mechanisms in outsourced projects relative to internal projects, yet controls enhance systems development performance in internal projects but not in outsourced projects. We introduce a distinction between attempted control and realized control to explain this disconnect, and show how anticipated transaction hazards motivate the former but meeting specific informational and social prerequisites facilitate the latter. Our results contribute three new insights to the systems development control literature. First, controllers attempt to use controller-driven control mechanisms to a greater degree in outsourced projects but controllee-driven control mechanisms to a greater degree in internal projects. Second, we establish a hitherto-missing control--performance link. The nuanced differences in internal and outsourced projects simultaneously confirm and refute a pervasive assertion in the information systems controls literature that control enhances performance. Finally, we show how requirements volatility--which can be at odds with control--alters the control--performance relationships. Implications for theory and practice are also discussed.
As outsourcing evolves into a competitive necessity, managers must increasingly contend with the decision about which software development projects to outsource. Although a variety of theories have been invoked to study the initial outsourcing decision, much of this work has relied in isolation on one theoretical perspective. Therefore, the relative importance ascribed by managers to the factors from these theories is poorly understood. The majority of this work also masks interesting insights into outsourcing decisions by focusing on the information technology (IT) function rather than individual projects as the unit of analysis, where many of these decisions occur. In contrast, prior research at the project level has focused on predicting development performance in the postoutsourcing-decision phases of projects. The objective of this study is to examine the relative importance that IT managers ascribe to various factors from three complementary theories--transaction cost economics, agency theory, and knowledge-based theory--as they simultaneously consider them in their project outsourcing decisions. A secondary objective is to assess the cross-cultural robustness (United States versus Japan in this study) of such models in predicting project-level IT outsourcing decisions. We develop and test a multitheoretic model using data on 1,008 project-level decisions collected from 33 Japanese and 55 U.S. managers. Overall, our results provide novel insights into the relative importance that managers ascribe to the factors from these three theories, their complementarities and occasional contradictions, and offer new insights into the differences among U.S. and Japanese IT managers. Implications for theory and practice are also discussed.
This paper addresses the understudied issue of how individually held expertise in information systems development (ISD) teams results in creativity at the team level during the development process. We develop the idea that team creativity results primarily from integration of individually held expertise of team members at the team level. We further propose the quality of intrateam relationships and knowledge complementarities that align the work of individual team members at the project level influence creativity primarily through the process of expertise integration. We use data from a field study of 142 participants in 42 ISD projects to test the proposed model. The paper makes three new contributions to the IS literature. Its key contribution lies in developing an expertise integration view of team creativity. We demonstrate the centrality of integrating individually held tacit and explicit knowledge about the problem domain and the technology at the team level in achieving team creativity. The use of a process-focused conceptualization of team creativity is especially noteworthy here. The second contribution of the paper lies in conceptually developing and operationalizing the concept of expertise integration, a mechanism by which individually held knowledge is integratively applied at the project level. Although the importance of knowledge in the ISD process is widely recognized in prior research, this is the first study to develop the concept in a operationally meaningful way. The third key contribution lies in showing that the compositional and relational attributes of ISD project teams--diverse specialized knowledge in a team, the quality of intrateam working relationships, and members' cross-domain absorptive capacity--do not engender creativity by themselves; they do so primarily because they enhance integration of individual knowledge at the project level. We offer empirical evidence for such full mediation. These findings have important theoretical and practical implications, which are discussed in the paper.