Transaction Cost Economics on trial again: A commentary on “The Role of Transaction Cost Economics in Information Technology Outsourcing Research: A Meta-Analysis of the Choice of Contract Type”

2016 | Journal of Strategic Information Systems | Citations: 0

Authors: Lacity, Mary C.; Khan, Shaji A.

Abstract: IntroductionWe welcome the opportunity to comment on ''The Role of Transaction ... Expand

Abstract: IntroductionWe welcome the opportunity to comment on ''The Role of Transaction Cost Economics in Information Technology Outsourcing Research: A Meta-analysis of the Choice of Contract Type". We think Schermann et al. (2016) offers the IS community an opportunity to debate not only Transaction Cost Economics (TCE) in the context of Information Technology Outsourcing (ITO), but also provides an opportunity to debate the larger issue of fair theoretical appropriations. We structure our commentary as follows. First, we briefly comment on the value of the empirical findings in Schermann et al. (2016). Second, we raise the question, ''What is a fair theoretical appropriation?" We present three arguments relevant to fair theoretical appropriations and assess Schermann et al. (2016) relative to the arguments. Overall, our aim is not to ''win" the debate or to comment on one isolated review article, but to invoke a thoughtful conversation within the IS community. Schermann et al. (2016)'s empirical findingsTo appear in a top IS journal, papers must make a substantial contribution to knowledge. In our view, Schermann et al.(2016) make a substantial contribution by summarizing the effects of five variables on contract choices used to govern ITO relationships spanning three decades of empirical work. Schermann et al. (2016) coded and investigated the effects of five independent variables (IVs)-technological uncertainty, requirements uncertainty, technological complexity, organizational complexity, and project size-on contract type (CT) (fixed price or time & materials). In their meta-analysis these five variables were further coded as ''task uncertainty". They assessed the effects of these IVs on CT over two time periods, before and after 1999. Although some readers may contest how Schermann et al. (2016) coded some of these constructs, their choices are fully transparent. They showed readers in Appendix 3 how they chose to code the constructs contained in the 28 articles. Other researchers are free to make alternative choices and re-run the analyses.Schermann et al. (2016) found that technological uncertainty and technological complexity had no statistically significant effects on contract type in either time period. This is an intriguing finding, as a number of theoretical perspectives suggest that high levels of technological uncertainty and technological complexity would favor time & materials contracts over fixedprice contracts. The authors also found that higher levels of technological uncertainty, organizational complexity, and project size (as they defined these variables) were positively related to the choice of time & materials contracts over fixed price contracts before 1999, but not after. Something interesting is clearly happening empirically! Thus, the findings, even in isolation from a theoretical explanation, make a contribution to knowledge. Collapse

Topics: task uncertainty asset specificity outsourcing IT project cloud computing

Methods: meta analysis literature sample literature study cross sectional research theory development

Theories: evolutionary theory transaction cost economics agency theory general relativity theory game theory