While we provide an integrative framework to analyze the
productivity impact of IT outsourcing, our study is not without
limitations. The sample data for IT outsourcing contracts
is limited to large Fortune 1000 firms.
These firms are
survivors in competitive business environments (perhaps by
exploiting IT better than others).
Therefore, we need to be
cautious in generalizing our results to smaller firms. Similarly,
the data on outsourcing arrangements is collected from
press releases, which may favor larger IT outsourcing deals as
these often get more attention from the media.
Since data on
some determinants of the sourcing decision are not available,
we use proxy variables where appropriate.
For example, we
use IT intensity as a proxy for internal IT capability.
In
general, the proxy variables are reasonably specified and have
the expected signs. Still, we are not able to include factors
such as transaction costs and resource relocation costs in the
selection equation.
Since IT vendors
may become better positioned to deliver IT services as they
accumulate knowledge over time, all firms, but especially
those that have not outsourced, should periodically evaluate
their sourcing strategy