An Empirical Analysis of Intellectual Property Rights Sharing in Software Development Outsourcing

2017 | Management Information Systems Quarterly | Citations: 19

Authors: Chen, Yuanyuan; Bharadwaj, Anandhi; Goh, Khim

Abstract: Software development outsourcing (SDO) contracts are plagued with ex post opport ... Expand

Abstract: Software development outsourcing (SDO) contracts are plagued with ex post opportunism and underinvestment problems. Property rights theory (PRT) argues that appropriate property rights allocation between vendors and clients can reduce opportunism and incentivize relation-specific investments. We conduct an in-depth content analysis of 171 real SDO contracts and empirically examine how project attributes and contract parties’ bargaining power affect the allocation of intellectual property rights (IPR). We find that clients retained more IPR when software development was modularized whereas they shared more IPR with vendors in contracts that incorporated greater use of a vendor’s proprietary software. Greater levels of task complexity were associated with more IPR sharing with vendors. We also find that the responsiveness of IPR to project attributes varied across the different types of intellectual assets. For example, vendors were more likely to obtain redeployment rights of know-how if they were contracted for novel software development projects. However, clients were less likely to cede ownership of data and confidential information embedded in software customization projects. We control for a variety of firm and transaction characteristics and the results we obtain here are robust to concerns of endogeneity bias. Keywords: Software development, outsourcing, contract design, intellectual property rights allocation, property rights theory, incomplete contracts Collapse

Topics: price management task complexity systems development outsourcing IT development project

Methods: qualitative coding qualitative content analysis Chow test robustness check econometric modeling

Theories: property rights theory transaction cost economics

Design and Analysis of Contracts for Software Outsourcing

2010 | Information Systems Research | Citations: 93

Authors: Dey, Debabrata; Fan, Ming; Zhang, Conglei

Abstract: Outsourcing of software development allows a business to focus on its core compe ... Expand

Abstract: Outsourcing of software development allows a business to focus on its core competency and take advantage of vendors' technical expertise, economies of scale and scope, and their ability to smooth labor demand fluctuations across several clients. However, contracting a software project to an outside developer is often quite challenging because of information asymmetry and incentive divergence. A typical software development contract must deal with a variety of interrelated issues such as the quality of the developed system, the timeliness of delivery, the effort and cost associated with the project, the contract payment, and the postdelivery software support. This paper presents a contract-theoretic model that incorporates these factors to analyze how software outsourcing contracts can be designed. We find that despite their relative inefficiency, fixed-price contracts are often appropriate for simple software projects that require short development time. Time-and-materials contracts work well for more complex projects when the auditing process is efficient and effective. We also examine a type of performance-based contract called quality-level agreement and find that the first-best solution can be reached with such a contract. Finally, we consider profit-sharing contracts that are useful in situations where the developer has more bargaining power. Collapse

Topics: outsourcing system quality systems development IT project moral hazard

Methods: design artifact optimization model usability testing mathematical model

Theories: contract theory lemon market theory

SOFTWARE BUSINESS IN INDUSTRIAL COMPANIES: IDENTIFYING CAPABILITIES FOR THREE TYPES OF SOFTWARE BUSINESS

2010 | International Conference on Information Systems | Citations: 0

Authors: Väyrynen, Karin

Abstract: The development of organizational capabilities takes time and resources, and the ... Expand

Abstract: The development of organizational capabilities takes time and resources, and they are difficult to change once they have been created. Recently, also non-software companies – so-called industrial companies – have started to sell software and related services. So far it has been unclear which capabilities are needed in, and whether they differ for, different types of software business in industrial companies. The present research closes this gap and identifies 20 software business capabilities by studying the capabilities relevant in three types of software business in industrial companies. Of these capabilities, some proved to be relevant for all types of software business, some for software product and/or enterprise solution system business, and some for software service business. Based on our findings, industrial companies could improve their competitive position by directing their resources at the development or improvement of specifically those capabilities that proved to be relevant for a certain type of software business. Collapse

Topics: systems development enterprise application integration software developer software contract systems documentation

Methods: qualitative interview case study longitudinal research multiple case study time series analysis

Theories: information systems theory

Empirical Analysis of Intellectual Property Risks in Software Outsourcing

2009 | International Conference on Information Systems | Citations: 0

Authors: Chen, Yuanyuan; Bharadwaj, Anandhi

Abstract: We address the issue of intellectual property (IP) rights in onshore and offshor ... Expand

Abstract: We address the issue of intellectual property (IP) rights in onshore and offshore software development outsourcing. IP assets are generally intangible in nature and are easily misappropriated by the contracting parties. The paper examines two IP protection mechanisms employed by firms: rights-sharing arrangements and restrictive covenants and using data from 153 software contracts across 14 countries we show how IP protection mechanisms are related to software customization, software modularity, pricing scheme, and to the strength of the overall IP legal protection environment in the vendor countries. Collapse

Topics: systems development price management outsourcing offshoring intellectual property

Theories: property rights theory

Quality and Profits Under Open Source Versus Closed Source

2002 | International Conference on Information Systems | Citations: 6

Authors: Mishra, Birendra; Prasad, Ashutosh; Raghunathan, Srinivasan

Abstract: The open source model of software development has received substantial attention ... Expand

Abstract: The open source model of software development has received substantial attention in the industry and popular media; nevertheless, critics frequently contend that open source software are inferior in quality compared to closed source software because of lack of incentives and project management, while proponents argue the opposite. This paper examines this quality debate by modeling and analyzing software development under open and closed source environments. The results show no dominant quality advantage of one method over another under all circumstances. Conditions under which each method can generate higher quality software are examined. Collapse

Topics: software developer open source system quality systems development productivity

Methods: simulation

Theories: game theory

Modelling the price, performance and contract characteristics of IT outsourcing

2000 | Journal of Information Technology | Citations: 25

Authors: Domberger, Simon; Fernandez, Patrick; Fiebig, Denzil G

Abstract: The rapidly increasing use of outsourcing for IT services, both in the public an ... Expand

Abstract: The rapidly increasing use of outsourcing for IT services, both in the public and private sectors, has attracted much interest from researchers and practitioners alike. While early studies of IT outsourcing were largely qualitative in nature, more recent studies have attempted to analyse the outcomes achieved in quantitative terms. This paper is consistent with the latter, but goes further by modelling the price, performance and contract characteristics that are relevant to IT outsourcing. A two-equation recursive regression model was used to analyse 48 contracts for IT support and maintenance. The results did not reveal any quantitatively significant price–performance trade-off, but did suggest that first-term contracts (i.e. the first ever contract awarded by a client for the provision of a particular IT service) were more expensive than repeat contracts. Although competitive tendering did not result in lower prices than directly negotiated contracts, it was associated with comparatively better performance. Well-defined expectations of an organization’s IT requirements were also likely to lead to improved performance when the service was outsourced. Collapse

Topics: outsourcing computer hardware system maintenance software contract price management

Methods: regression analysis method survey sensitivity analysis multiple regression ordinary least square