When selection bias is controlled for, the coefficient of IT
knowledge in equation (7b) ranges from 0.047 to 0.052
depending on the empirical specification, and is statistically
significant at the 10 percent level. This result implies that
outsourcing firms receive additional benefit from the IT
knowledge accumulated by their IT services vendors. While
the coefficient of IT intensity is not significant in all
specifications, its interaction term with IT knowledge is
significant at the 5 percent level (see column (ii)). This
implies that firms with higher IT intensity receive greater
benefits from the IT knowledge transmitted from IT services
firms, perhaps because they are better equipped to absorb
external knowledge. We also include interaction terms for IT
knowledge with the types of IT services that a firm
outsources, whether hardware or software focused, to see if
there is any systematic difference in value creation depending
on the type of service outsourced. In this specification, we
consider one service type at a time and drop the interaction
term for IT knowledge with IT intensity due to multicollinearity
between the interaction terms. The results
suggest that hardware has a main effect on productivity gains
but its interaction effect is not statistically significant. In the
case of software we find that the main effect is not significant,
while its interaction with IT knowledge becomes statistically
significant at the 10 percent level.