| As information systems (IS) outsourcing expands in scale and scope, it has become a fundamental issue in management of information systems. While the importance of IS outsourcing has been recognized, very little empirical research has been done to address this issue. The primary purpose of this study is to investigate the factors contributing to the success and failure of IS outsourcing relationships between client firms and vendors. The proposed research model is based on the relational exchange theory, communication behavior and conflict resolution literature, and transaction cost theory.;A survey study of 207 IS outsourcing relationships of U.S. firms indicates that (1) vendor capability, solidarity, continuity expectation, flexibility, monitoring of the vendor, participation, and joint problem solving are positively related to the success of IS outsourcing relationships, and that (2) role integrity, persuasion, and use of harsh words, and asset specificity are negatively related to the success of IS outsourcing relationships. The findings suggest that a strong formation of relational exchange attributes, as opposed to discrete exchange, is essential to successful implementation of IS outsourcing. Based on the findings, managerial guidelines are suggested in selection of outsourcing tasks, selection of the vendor, and on-going management of relationships.;Additionally, this study provides an analysis of descriptive statistics on outsourcing practices of 355 U.S. firms. The topics include IS executives/managers' perceptions about IS outsourcing in general, risk factors, and contract characteristics of IS outsourcing arrangements. |
