IS
7892: Special Topics in Information Systems:
Economic,
Strategic, and Social Theories Used in I.S. Sourcing Research
Dr. Mary C. Lacity
233 Computer Center Building
(314) 516-6127 (work)
(314) 516-6827 (fax)
Email: Mary.Lacity@umsl.edu
Homepage: http:/www.umsl.edu/~lacity
Tuesday 10:00 to 12:30 2nd floor CCB Conference
Room (unless otherwise noted)
This course explores the theoretical and empirical
foundations of IS research in the IS Sourcing Context. The primary objective is to prepare students
to be IS researchers by demonstrating the variety of theories and
methodological approaches used to study IS.
Students will learn major reference theories adopted from other
disciplines and applied to IS research, including transaction cost economics,
resource based view,
resource dependency theory, agency theory, social exchange
theory, institutionalism, social cognitive theory, auction theory, control
theory, game theory, and others. These theories are applied to the IS sourcing
context to identify the determinants of IS sourcing, critical success factors,
ideal contracts, and governance forms.
Students will gain an in-depth knowledge of the theories and empirical
results of many IS sourcing options including total outsourcing, selective
outsourcing, total insourcing, application service provision, offshore
outsourcing, and business process outsourcing.
GRADING:
15% Active class participation
30% Weekly paper critiques (1-2
papers per student per week)
30% Weekly Quizzes
25% Supplier Analysis Presentation
WEEKLY QUIZZES:
At the start of class each week, I will
administer a brief quiz on the assigned readings. The purpose of the quiz is to give you that
extra incentive to read all assignments prior to class. The quizzes will assess basic understanding
of the material, while the subsequent class discussion will provide more
erudite analysis. The lowest quiz grade
will be dropped.
WEEKLY PAPER SUMMARY/ CRITIQUES:
One of our goals is to also prepare
you for your comprehensive exams. One of
the best ways to do this is to summarize each book/article you read and file it
into meaningful categories so that you only have to study your summaries rather
than revisiting the 1,000 plus articles/books you will read during your
doctoral studies. For class, I am only
asking that you each prepare one or two summaries each week, then share your
summaries with your classmates. Each
student will also be asked to present/lead the class discussion for the
article/book. For students new to this
process, see the following website as an example of a summary: http://www.umsl.edu/~lacity/readsum.html It is also good to
add some of your own insights to the summary.
WEEKLY CLASS
PARTICIPATION:
It is vital that students attend all
sessions. Please make attendance your number one
priority. This class will only be valuable if each and every one of us makes a
commitment to be prepared. That means
that each student must have carefully read all the reading assignments
prior to class. I will assess the class
participation grade based on my impression of your weekly preparation,
meaningful insights, plentiful comments, intellectual curiosity, and
enthusiasm.
In a rare circumstance that a
student has to miss class (such as the birth of a child or severe illness),
please contact me immediately so I may organize an audio recording of
class.
SUPPLIER ANALYSIS
PRESENTATION. Each student will study two
outsourcing suppliers and do a 30 minute presentation on their findings. Using secondary sources (like SEC documents,
press releases, homepage) present the 5 year stock price, 5 year sales, 5 year
profits, describe the supplier's largest customers and provide contract details
where available. Describe the company's geographic reach, current strategy,
future direction, and perceived risks.
Describe the company's history, including founding members, current CEO,
and current Chairman. Companies to
research:
(1) EDS & Accenture (privately held)
(2) IBM & Cognizant (privately held)
(3) CSC, Wipro,
(4) Infosys, CGI,
WINTER 2006 CLASS:
Vidya Iyer mailto:vvi6vf@umsl.edu
Denise Franke mailto:dmfnp6@umsl.edu
Kyootai Lee mailto:klm7b@umsl.edu
Most of
the articles are available on ABI Inform or EBSCO. Additional materials will be photocopied and
distributed to you.
The
following books are required:
Ekeh,
Peter, Social Exchange Theory: The Two Traditions,
Pfeffer, J., Managing With Power:
Politics and Influence in Organizations,
Lacity, M.,
and Hirschheim, R., Information Systems Outsourcing: Myths Metaphors and
Reality, Wiley,
January
17: COURSE OVERVIEW
|
Perspective |
Theory
|
Main Constructs
|
Brief Summary
|
|
Economic |
Transaction Cost Theory |
Production costs Transaction Costs Asset specificity Frequency of Transaction Uncertainty Opportunism Contracts |
TCT generally addresses the
question: why do firms exist? And TCT specifically addresses the question:
should companies make or buy resources?
Make-or-buy decisions are presumed to be made on an economic basis,
considering production & transaction costs. |
|
Agency Theory |
Contracts; Monitoring, bonding, and Residual
loss costs |
AT purports that principal-agent
relationships--characterized by different goals and risk preferences--should be
efficiently managed, particularly with appropriate contracts. |
|
|
Strategic |
Resource-Based View |
Resource value Resource rareness Resource Mutability Non-substitutability |
RBV purports that competitive
advantage of a firm arises from developing & deploying unique, valuable,
and costly-to-copy capabilities. Implies that companies should retain core
capabilities, but that non-core capabilities do not have to be owned or
controlled. |
|
Resource Dependency Theory |
External Environment; Concentration; Munificence; Interconnectedness |
RDT The organization’s dependence on outsourcing is determined by the importance of the resource to the organization, the number of potential suppliers, and the cost of switching suppliers, etc. |
|
|
Game Theory/ Auction Theory |
Payoff Calculation Opponent Assessment Information Asymmetry |
These theories are applied to
customer-supplier bidding & negotiations. |
|
|
Social |
Social/Relational Exchange Theory |
Trust Culture Personal Satisfaction & Gain |
Relationships between customers
and suppliers are based on trust developed over time (partnership advantage) |
|
Institutionalism |
Mechanisms of Isomorphic Change: Coercive, Mimetic, Normative |
The subset of this theory,
institutional isomorphism studies how organizations eventually adopt similar
practices through three mechanisms of change: force, copy-catting,
and norms. In sourcing, many contracts and practices are essentially
standardized. |
|
|
Power Theories |
Sources of Power Political Tactics |
Organizational decision-making
processes are characterized by the power and political tactics of
stakeholders involved. |
|
|
Persistent Expectations; Schemas,
Scripts, & Frames; Decision-making & Causal Analysis |
Social cognition theory studies
how ordinary people think about other people (phenomenology) and how people
think they think about people (naďve scientists) |
January 24: OVERVIEW OF I.S. SOURCING
CONTEXT PART I (strategic
intent, detailed cases & processes)
(Vidya) DiRomualdo, A., and Gurbaxzni,
V., “Strategic Intent for IT Outsourcing,” Sloan Management Review, Summer, 1998, Vol. 39, 4, p. 67-1998.
(Denise) Lacity, M., and Willcocks,
Global Information Technology Outsourcing: Search for Business Advantage,
Wiley,
(Kyootai) Feeny, D. and Willcocks,
L., “Core IS Capabilities for exploiting Information Technology, Sloan
Management Review, Vol. 39, Spring, 1998, pp. 9-21.
January 31: OVERVIEW OF I.S. SOURCING CONTEXT
PART II (Actual
Outcomes, Proven Practices, Vendor Perspective)
(Xinde) Lacity,
M., and Willcocks, L., "Practices in Information Technology Outsourcing:
Lessons From Experience," MIS Quarterly,
September, Vol. 22, 3, 1998, pp. 363-408. (updated
data is in chapter 6 Lacity and Willcocks 2001).
(Vidya)
Hall, J., and Liedtka, S. "Financial Performance, CEO Compensation, and
Large-Scale Information Technology Outsourcing Decisions,"
Journal of Management
Information Systems. Summer 2005, Vol. 22, 1. p. 193
(Denise) Hirschheim, R., and Lacity,
M. "Information Technology Insourcing: Myths and Realities", Communications
of the ACM, February, 2000.
(Kyootai) Levina, N., and Ross, J.,
“From the Vendor’s Perspective: Exploring the Value Proposition in Information
Technology Outsourcing,” MIS Quarterly, Vol. 27, 3, September 2003, pp.
331-364.
12/05 Press Release:
"New IBM Research
Quantifies the Long-Term Impact of IT Outsourcing on Three Business Metrics," to be handed
out
February 7: OVERVIEW OF I.S. SOURCING CONTEXT
PART III (ASP, Offshore Outsourcing, BPO)
(Xinde) Kern, T., Willcocks, L., and Lacity, M.,
"Application Service Provision: Risk Assessment and Risk Mitigation,"
MIS Quarterly Executive, Vol. 1, 2, 2002, pp.113-126.
(Vidya) Susarla, A., Barua, A., and Whinston, A.,
“Understanding the Service Component of Application Service Provision, An
Empirical Analysis of Satisfaction with ASP Services, MIS Quarterly,
Vol. 27, 1, March 2003, pp. 91-124.
(Denise) Rottman, J., and Lacity,
M., "Proven Practices for IT Offshore Outsourcing," Cutter Consortium,
Vol. 5, 12, 2004, pp. 1-27.
(Kyootai) Lacity, M., Feeny, D., and
Willcocks, L., "Transforming a back-office function: Lessons from BAE
Systems' Experience With an Enterprise Partnership," MIS Quarterly Executive,
2003.
February 14: Overview of entire academic
literature
Presentation of EDS &
Accenture (privately held): Vidya
(Denise, Kyootai & Xinde—individual or group, your choice)Dibbern, j., Goles, T., Hirschheim, R., and Bandula J. , "Information Systems Outsourcing: A Survey and Analysis of the Literature," Database for Advances in Information Systems, Fall 2004, Vol. 35, 4; p. 6-102.
February 21: TRANSACTION COST ECONOMICS
Presentation
of IBM & Cognizant (privately held) Denise
(Kyootai) Williamson,
Oliver. 1991a. “Strategizing,
economizing, and economic organization,” Strategic
Management Journal, 12: 75-94.
(Xinde) Williamson, O. 1991b. “Comparative economic organization: The analysis of discrete structural
alternatives,” Administrative Science Quarterly, 36: 269-296.
(Vidya) Ghoshal, S. and P. Moran. 1996.
"Bad for practice: A critique of the transaction cost theory,"
Academy of Management Review, 21:
13-47.
Barney, J., “How a Firm’s
Capabilities Affect Boundary Decisions,” Sloan Management Review, Spring
1999, Vol. 40, 3., pp. 137-145.
February 28: NO CLASS: Professor in
March 7: TRANSACTION COST ECONOMICS APPLIED TO
I.S. SOURCING
Presentation of CSC &
Wipro (Kyootai)
(Denise) Ang, S. and Straub, D. ‘Production and Transaction
Economies and Information Systems Outsourcing – A Study Of
The
(Xinde) Nam,
K., Rajagopalan, S., Rao, H., and Chaudhury, "A
Two-level investigation of Information Systems Outsourcing," Communications
of the ACM, Vol. 39, 7, July 1996, pp. 36-44.
(Vidya) Qu, Z., and Brocklehurst, M.,
“What Will it Take for
Lacity, M. and
Willcocks, L. (1996). Interpreting Information
Technology Sourcing Decisions From A Transaction Cost Perspective: Findings and
Critique. Accounting, Management and
Information Technology, 5, 3/4, 203-244.
March 14:
AGENCY THEORY AND INSTITUTIONAL THEORY
Presentation of Infosys & CGI (Xinde)
Agency Theory:
(Denise) Eisenhardt,
Kathleen M, "Agency Theory: An Assessment And
Review," The
(Kyootai) Logan, Mary, “Using Agency Theory to Design Successful Outsourcing
Relationships,” International Journal of Logistics Management, Vol. 11,
2, 2000, pp. 21-32.
Institutionalism Theory:
(Vidya) DiMaggio,
P., and Powell, W., "The Iron Cage Revisited: Institutional Isomorphism
and Collective Rationality in Organizational Fields," in The New
Institutionalism in Organizational Analysis, (Powell & DiMaggio eds), The University of
Ang, Soon, and Cummings, Larry,
"Strategic Response to Institutional Influences on IS Outsourcing," Organization
Science, Vol. 8, 3., May-June 1997, pp. 235-256.
March 21: RESOURCE BASED VIEW & RBV APPLIED
TO I.S. SOURCING
(Denise) Michalisin,
Michael, "In search of strategic assets", International Journal of
Organizational Analysis,
(Kyootai) Barney, Jay, "Firm
Resources and Sustained Competitive Advantage," Journal of Management,
Vol. 17, 1, pp. 99-120.
(Xinde) Roy,
V., and Aubert, B., "A Resource-Based Analysis
of IT Sourcing," Database for Advances in IS, Spring
2002, Vol. 33, 2, pp. 29-40.
(Vidya) Straub,
D., Weill, P., and Stewart, K., "Strategic Control of IT Resources: A Test
of Resource-Based Theory in the Context of Selective IT Outsourcing,"
Working paper,
Teng, J., Cheon,
M., and Grover, V., "Decisions to Outsource IS Functions: Testing a
Strategy-Theorectic Discrepancy Model," Decision
Sciences, Vol. 26, 1, pp. 75-103.
March 28: NO CLASS--SPRING BREAK
April 4: SOCIAL/RELATIONAL EXCHANGE THEORY
Social Exchange Theory:
(Denise) Ekeh,
Peter, Social Exchange Theory: The Two Traditions, Harvard University Press, 1974. pp.
1-186; particular attention to chapter 7.
Relational Exchange Theory:
(Kyootai) Dwyer, R., Schurr, P., and Oh, Sejo, “Developing
Buyer-Seller Relationships,” Journal of Marketing, Vol. 51, April 1987, pp.
11-27.
Social/Relational Exchange Theory Applied to IS
Sourcing:
(Xinde) Ang, Soon, and Slaughter, S., “Work Outcomes and Job Design
For Contract Verses Permanent Information Systems Professionals on Software
Development Teams,” MIS Quarterly, Vol. 25, 3, pp. 321-350.
April 11: SOCIAL/RELATIONAL EXCHANGE THOERY
APPLIED TO I.S. SOURCING
(Vidya) Klepper, R., “The Management of Partnering Development in
IS Outsourcing,”
Journal of Information Technology, Vol. 10, 1995, pp.
249-258. (EBSCO)
(Denise) Lee, Jae-Nam
and Kim, Young-Gul, "Effect of partnership
quality on IS outsourcing: Conceptual framework and empirical validation,"
Journal of Management Information Systems, Spring
1999; Vol. 15, 4; pg. 29-52.
(Kyootai) Grover, Varun, "The effect of service quality and partnership
on the outsourcing of information systems functions," Journal of Management
Information Systems, Spring 1996;
Vol. 12, Iss. 4; pg. 89-119.
(Xinde) Sabherwal,
R., "The Role of Trust in Outsourced Relationships," Communications
of the ACM, Feb 1999, Vol. 42, 2, pp. 80-86.
April 18: POWER THEORIES AND POWER THEORIES
APPLIED TO I.S. SOURCING
Power Theories:
(Vidya) Pfeffer, J., Managing
With Power: Politics and Influence in Organizations,
(Denise)
Lacity, M., and Hirschheim, R., "Theoretical Foundations of Outsourcing
Decisions: The Political Model", from Information Systems Outsourcing:
Myths, Metaphors, and Realities, Wiley,
Power Theory applied to IS sourcing:
(Kyootai) Allen, D., Kern, T., and Mattison, D., "Culture, Power, and Politics in ICT
outsourcing in higher education," European Journal of
Information Systems, Vol 11, 2002, pp. 159-173.
(Xinde) Peled, A., “Outsourcing and Political Power: Buraucrats, Consultants, Vendors, and Public Information
Technology,” Public Personnel Management, Winter
2001, Vol. 30, 4, pp. 495- 514.
Lacity,
M., and Hirschheim, R., "Participant's Reasons for Initiating Outsourcing
Evaluations", from Information Systems Outsourcing: Myths, Metaphors,
and Realities, Wiley,
April 18: OTHER THEORIES APPLIED TO I.S.
SOURCING
Social Cognition applied to IS sourcing:
(Vidya) Ho,
V., Ang, S., and Straub, D., “When Subordinates
become IT Contractors: Persistent Managerial Expectations in IT Outsourcing,”
Information Systems Research, Vol. 14, 1, pp. 66-86.
Auction Theory Applied to IS Sourcing:
(Denise) Kern, Thomas, and
Willcocks, L., "The Winner's Course in IT Outsourcing: To Avoid Extreme
Relational Trauma,"
Residual Rights Theory Applied to IS Sourcing:
(Kyootai) Lee, J., Miranda, S., and
Kim, Y., "IT Outsourcing Strategies: Universalistic, Contingency, and Configurational Explanations of Success," Information
Systems Research, Vol. 15, 2, June 2004, pp. 110-131.
Control Theories Applied to IS Sourcing:
(Xinde) Choudhury, V., and Sabherwal, R., “Portfolios of Control in
Outsourced Software Development Projects,” Information Systems Research,
Vol. 14, No3, September 2003, pp. 291-314.
May 2:
OTHER THEORIES & MULTIPLE THEORIES:
Innovation Diffusion Theory Applied to IS
Sourcing:
(Vidya) Hu, Qing, Saunders, Carol,
Gebelt, Mary, " Research report: Diffusion of information
systems outsourcing: A reevaluation of influence sources," Information Systems Research,
Sep 1997, Vol. 8, 3; p. 288.
Multiple Theories applied to IS Sourcing:
(Denise) Poppo, Laura and
Todd Zenger, 1998. Testing alternative theories of the
firm: Transaction cost, knowledge-based,
and measurement explanations for make-or-buy decisions in information
services. Strategic Management
Journal, 19, 853-877.
(Kyootai) Tsang, Eric,
"Transaction cost and resource-bases explanations of joint ventures: A
comparison and synthesis," Organization Studies, Vol. 21, 1, 2000,
pp. 215-242
(Xinde) Gopal, A., Sivaramakrishnan, K., Krishnan, M., and
Mukhopadhyay, T., "Contracts in Offshore Software Development: An
Empirical Analysis," Management Science, Dec
2003, Vol. 49, 12, pp. 1671-1683.