Exploring the Impact of Fit between Context Factors and Pricing Model Choice on the Success of IT Outsourcing Mega-Deals

The interplay between internal and external contextual factors and pricing model choice in IT outsourcing (ITO) contracts is still an under-researched area in the ITO literature. However, as past and current examples of outsourcing failures indicate, an informed selection of an adequate pricing model indeed plays a crucial, if not decisive role to ensure a successful deal outcome and to mitigate risks in the wake of the deal. Based on contingency theory, the paper at hand explores 60 ITO megadeals (\u3e EUR 50 million) for the impact of the alignment of business objectives and market factors with pricing model choice on ITO deal performance. Our empirical results, which were based on a fitas- gestalts conceptualization, suggest that a high congruence of business objectives and market characteristics with pricing model attributes in ITO contracts engender better cost control and service results and a higher level of satisfaction after ITO deals than a low congruence of these factors. Our findings offer several interesting implications that can be used to improve pricing configurations in ITO deal contracts

Determinants of firms' inputs sourcing choices: the role of institutional and regulatory factors. ESRI WP599, September 2018

Using the theoretical framework of global sourcing with firm heterogeneity, we examine determinants of inputs sourcing choices of manufacturing firms established in the EU countries. To this purpose, we combine information on the ownership structure and company accounts from the Orbis data set with input-output data from the World Input-Output Tables (WIOT) and with information on institutional and regulatory factors at country level provided by international organisations. Our research findings indicate that manufacturing firms that source inputs intra-firm via foreign direct investment (FDI) across EU countries are larger, more productive, more intensive in tangible and intangible capital and less intensive in skills than manufacturing firms that source inputs at arm’s length. The probability of integrating inputs by manufacturing firms across EU countries is positively linked with the strength of legal systems, flexibility of labour markets and negatively linked to corporate tax rates and financial development in host countries. Less efficient insolvency procedures are associated with a higher probability of sourcing inputs intra-firm via FDI relative to arm’s length sourcing. The probability of sourcing inputs via FDI is negatively linked to sectoral restrictions to FDI and positively linked to the impact of service regulations on downstream industries

The impact of business process outsourcing on firm performance and the influence of governance : a long term study in the German banking industry

Does BPO pay off at the firm-level? Although there are several studies which analyze the potential benefits of BPO, there is a virtual absence of research papers on BPO outcomes. Based on an analysis of 137 Business process outsourcing (BPO) ventures at 254 German banks in a period between 1994 and 2005, we found that the outsourcer's financial performance in terms of profitability and cost efficiency was increased significantly compared to industry peers without BPO. The increase stems not from workforce reductions but rather from increased employee productivity. Further, we show how BPO governance ensures BPO success: individually negotiated outsourcing contracts help to improve cost efficiency and profitability measures. Relational governance based on trust has only positive effects on profitability. Keywords: Business Process Outsourcing, firm performance, firm characteristics, banking, German banks, governance JEL Classifications: G21, L14, L21, L2

A Three-Level Process Framework for Contract-Based Dynamic Service Outsourcing

Service outsourcing is the business paradigm, in which an organization has part of its business process performed by a service provider. In dynamic markets, service providers are selected on the fly during process enactment. The cooperation between the parties is\ud specified in a dynamically made electronic contract. This contract includes a process specification that is tailored towards service matchmaking and crossorganizational process enactment and hence has to conform to specific market and specification standards. Process enactment, however, relies on intraorganizational process specifications that have to comply with the infrastructure available in an organization. In this position paper, we present a three-level process specification framework for dynamic contract-based\ud service outsourcing. This framework relates the two process specification levels through a third, conceptual level. This approached is inspired by the well-known ANSI-SPARC model for data management. We show how the framework can be placed in the context of infrastructures for cross-organizational process support

Domestic Outsourcing, Rent Seeking, and Increasing Inequality

An increasing share of the economy is organized around financial capitalism, where, in contrast to the past, capital market actors actively assert and manage their claims on wealth creation and distribution. These new actors challenge prior assumptions of managerial capitalism about the goals and governance of firms. The focus on shareholder value is credited with increasing firm efficiency and shareholder returns. This lecture analyzes the changes in organizational behavior and value extraction under financial capitalism

Exploring the role of servitization to overcome barriers for innovative energy efficiency technologies – the case of public LED street lighting in German municipalities

In this paper we analyse the case for public application of LED street lighting. Drawing from the energy services literature and transaction cost economics, we compare modes of lighting governance for modernisation. We argue that servitization can accelerate the commercialisation and diffusion of end-use energy demand reduction (EUED) technologies in the public sector if third party energy service companies (ESCo) overcome technological, institutional and economic barriers that accompany the introduction of such technologies resulting in transaction costs. This can only succeed with a supportive policy framework and an environment conducive towards the dissemination of specific technological and commercial knowledge required for the diffusion process

Wage bargaining and the boundaries of the multinational firm

Do variations in labor market institutions across countries affect the cross-border organization of the firm? Using firm-level data on multinationals located in France, we show that firms are more likely to outsource the production of intermediate inputs to external suppliers when importing from countries with empowered unions. Moreover, this effect is stronger for firms operating in capital-intensive industries. We propose a theoretical mechanism that rationalizes these findings. The fragmentation of the value chain weakens the union's bargaining position, by limiting the amount of revenues that are subject to union extraction. The outsourcing strategy reduces the share of surplus that is appropriated by the union, which enhances the firm's incentives to invest. Since investment creates relatively more value in capital-intensive industries, increases in union power are more likely to be conducive to outsourcing in those industries. Overall, our findings suggest that multinational firms use their organizational structure strategically when sourcing intermediate inputs from unionized markets

The state-private interface in public service provision

Political theory sets out a strong case for the state to play a major role in public service provision. Yet services are often provided by a range of state and non-state actors as well as by collaborative partnerships. This paper surveys the literature, seeking to map arrangements in developing countries and to understand the politics of different types of service provision

Finding the right partners: institutional and personal modes of governance of university–industry interactions

We study two different governance modes of university–industry interactions: in the institutional mode, interactions are mediated by the university through its administrative structures (such as departments or dedicated units such as technology transfer offices), while in the personal contractual mode interactions involve formal and binding contractual agreements between firms and individual academics, carried out without the direct involvement of the university. We argue that the choice of which form of governance to adopt involves different decision-making processes for firms and that both governance forms have important roles to play in the context of university–industry knowledge transfer. Relying on a representative sample of firms in the Italian region of Piedmont, we examine the characteristics and strategies of firms that interact with universities under different governance modes. Our results indicate that ignoring personal contractual arrangements with individual researchers, as the previous literature does, amounts to overlooking at least 50% of university–industry interactions. The econometric estimations suggest that personal contractual interactions are used relatively more by small firms involved in technology and open innovation strategies, while institutional interactions are mostly used by large firms that vertically integrate R&D activities

Understanding smart contracts as a new option in transaction cost economics

Among different concepts associated with the term blockchain, smart contracts have been a prominent one, especially popularized by the Ethereum platform. In this study, we unpack this concept within the framework of Transaction Cost Economics (TCE). This institutional economics theory emphasizes the role of distinctive (private and public) contract law regimes in shaping firm boundaries. We propose that widespread adoption of the smart contract concept creates a new option in public contracting, which may give rise to a smart-contract-augmented contract law regime. We discuss tradeoffs involved in the attractiveness of the smart contract concept for firms and the resulting potential for change in firm boundaries. Based on our new conceptualization, we discuss potential roles the three branches of government – judicial, executive, and legislative – in enabling and using this new contract law regime. We conclude the paper by pointing out limitations of the TCE perspective and suggesting future research directions