893 research outputs found

    SETTING TARGETS RIGHT! HOW NON-RATIONAL BIASES AFFECT THE RISK PREFERENCE OF IT-OUTSOURCING DECISION MAKERS - AN EMPIRICAL INVESTIGATION

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    During the past 20 years, a rich but diverse body of knowledge has accumulated regarding information technology outsourcing (ITO). Researchers have studied several factors that explain ITO decisions. So far, previous studies resorted mainly to rational efficiency criteria. In recent years researchers started to integrate soft factors into the explanatory models. In many cases, the failure of ITO projects still cannot be fully explained. By expanding ITO research in the direction of behavioral economics, this paper integrates psychological concepts that demonstrate that IT decision makers suffer from non-rational biases. Representing a broad variety of biases, this empirical study focuses on cognitive dissonance and reference point dependency. Using a structural equation model, based on an online survey with 198 participants, we show that IT decision makers use targets of past decisions as reference points. The assessment of target achievement in a subsequent decision can evoke cognitive dissonance that non-rationally affects the risk preferences of the decision maker. Two fictional scenarios demonstrate the practical implications of our study. Setting targets too high can cause non-rational risk affinity, potentially leading to project failure. Conversely, setting targets too low may cause non-rational risk aversion restraining the decision maker to make use of the full performance of a project

    Positioning Clients in Dyadic Dependence Structures of IS Outsourcing Relationships – Conceptualization and Empirical Findings

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    While dependence is a well-known concern in IS outsourcing, there is little literature dealing with this phenomenon as proposed by traditional dependence research in other disciplines. In particular, little efforts have been made to contrast a client’s dependence with supplier’s dependence in a single study. To bring forward the conceptualization in our field, we investigated five outsourcing relationships with respect to dependence structures in a dyad. Perceptual differences became apparent while comparing clients’ perceived dependencies with suppliers’ ones. As a second contribution we aimed to explain different client positions in the dependence structures. Therefore, the dependence construct was broken down into its constituting facets. Besides importance of the outsourcing relationship and a supplier’s substitutability, spillover effects emerged as an unanticipated third category of dependence. Originating from other exchange relationships with the same partner, these effects can distort the dependence structure in the focal relationship. Implications for future research are discussed

    Corporate Divestment Decision Factors: A Systematic Review

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    I study the underlying decision factors of corporate business entity divestments. Specifically, I address four questions. Firstly, what are decision factors concerning the business entity (divestment object) itself that influence divestment? I concludefrom previous research that negative entity performance, insufficient benefits from the interplay between entities (whether between related or unrelated entities) and entity inferiority to marketplace alternatives (whether concerning costs or market opportunities) each considerably increases business entity divestment likelihood. Secondly, what are the psychological factors within decision-makers that influence divestment? I show from previous research that decision-makers’ familiarity with the entity’s business segment may distort a decision-maker’s entity assessment, thus biasing divestment decisions; escalation of commitment may lead to retaining failing projects despite being aware of their poor performance; and the managerial incentive to conceal investment  mistakes may at least postpone divestment as a result of self-interests. Thirdly, what factors in the organizational context influence divestment? I find from previous research that negative firm performance and path dependence of preceding divestments increase general propensity to divest, whereas units that are perceived to be essential to organizational image and identity are more reluctantly exited. Fourthly, which external stakeholders are important influencing factors in divestment? I indicate from previous research that the media, political entities, and blockholders may pressure decision-makers significantly and sway divestment decisions.Keywords: Corporate Divestment, Decision Factors, Psychological Factors, Organizational Factors, External Factor

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    Business Outsourcing and the Agency Cost Problem

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    Management of IS Outsourcing Relationships – A Dyadic Analysis of Antecedents and Consequences of Dependencies and Power

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    Many companies today rely heavily on specialized information technology (IT) suppliers for fulfilling their IT demands. However, external provision, i.e., outsourcing, of IT services is a risky endeavor, and expectations are frequently not met. This dissertation addresses the challenge of successfully managing outsourcing relationships between clients and IT suppliers. The dissertation begins by presenting results from a multiple case study that analyzes the organizational design of the management of supplier relations in the IT organizations of five client companies. These results contribute to research in this area and show IT decision makers on the client side efficient ways of organizing the ‘client-supplier interface’. Special attention is paid to the risks associated with outsourcing arrangements that should be addressed as part of successful relationship management. From a client’s perspective, excessive dependence on the IT supplier is viewed as a major outsourcing hazard. However, research from related disciplines suggests not only analyzing a client’s dependence but also incorporating the supplier’s dependence on the client in a dyadic exchange relationship. Differences between the dependency levels of the client and the supplier can lead to a power advantage for one party that can then be used to the detriment of the dependence-disadvantaged party. The dissertation investigates different dependence and power constellations in outsourcing relationships using a case study approach. The investigation results in conceptualizations and measurement instruments for client and supplier dependence in outsourcing relationships. The dissertation ends with a large-scale empirical survey that analyzes the effects of different combinations of dependencies and power use on the contractual partners’ satisfaction with the exchange performance. Taken together, the results advance knowledge about the successful management of outsourcing relationships and, more specifically, they enable clients and IT suppliers to capture and optimize dependence relations

    Three Studies Examining the Effects of Psychological Distance on Judgment and Decision Making in Accounting

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    This dissertation comprises three studies, a literature review and two experimental studies, that center on the effects of psychological distance on judgment and decision-making in accounting. Construal level theory (CLT) of psychological distance (Liberman and Trope 1998; Trope and Liberman 2003), a framework recently developed in the field of social psychology, constitutes the theoretical foundation for each study. The first study reviews extant literature on CLT and illustrates the theory\u27s potential for investigating previously unexplained phenomena within the accounting domain. Selected publications that apply CLT in contexts that are of particular interest to accounting researchers are emphasized and a series of broad, CLT-based research questions pertaining to various accounting domains are offered. The second study applies CLT to the audit context by investigating whether the performance of common auditing tasks that require varying degrees of abstract thinking affect decision-makers\u27 overall mindset and hence their subsequent judgment. Results from the second study have important implications for audit practice as auditors work in environments that require frequent shifts in focus due to multiple client or project demands. The third study applies CLT to the enterprise risk management context by examining how spatial distance from a risk assessment object and risk category (i.e., the type of risk) affects decision-makers\u27 assessment of the probability that the risk will materialize. The third study thus informs the corporate governance literature by identifying psychological distance as a potential source for judgment bias during the risk assessment process. Overall, the results reported in this dissertation suggest that psychological distance systematically affects individuals\u27 judgment subject to the caveat that the judgment of concern falls within the domain of the decision-maker\u27s routine cognition. By presenting empirical evidence from both the audit and the risk management domain, the studies contribute to our understanding of the heuristics and biases in judgment and decision-making in professional settings that are of interest to accounting research

    Development and validation of a conceptual framework for IT offshoring engagement success

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    “A thesis submitted to the University of Bedfordshire, in partial fulfilment of the requirements for the degree of Doctor of Philosophy”.The study presented in this thesis investigates Offshore Information Technology Outsourcing (IT offshoring) relationships from clients’ perspective. With more client companies outsourcing their IT operations offshore, issues associated with the establishment and management of IT offshoring relationships have become very important. With the growing volume of offshore outsourcing, the numbers of failures are also increasing. Therefore, both clients (service receivers) and suppliers (service providers) face increasing pressure to meet with the objectives of IT offshoring initiatives. Improving the quality of the relationship between client and supplier has frequently been suggested in the literature as probable solution area, however not much literature and empirical evidence is available in this respect. The aim of the study is to make a theoretical and practical contribution by studying the interplay between the critical factors influencing the relationship intensity level of the exchange partners and suggest measures that can potentially increase the success rate in IT offshoring engagements. The objectives of this study are: 1. To identify the relevant critical factors and explore its causes and effects (antecedents and consequences) on the relationship intensity significance level. 2. To develop an integrated conceptual framework combining the hypothetical relationship among these identified critical factors. 3. To empirically validate the conceptual framework. To accomplish the first objective and building the theoretical platform for the second objective, three research questions are identified and answered through empirical study backed by literature evidence. The second objective is addressed through an integrative conceptual framework by analysing the related studies across other disciplines, gaps in the existing theories and models in the outsourcing literature. Coupled with literature gap analysis, the researcher adopted some of the relevant features from across various disciplines of management and social sciences that are relevant to this study. After that, the third objective, the research hypotheses are validated with empirical examination conducted in Europe. Seven research hypotheses are developed based on literature analysis on the relationship of the key constructs in the conceptual framework. This study is explanatory and deductive in nature. It is underpinned mainly by a quantitative research design with structured questionnaire surveys conducted with stratified sampling of 136 client organisations in Europe. Individual client firm is the unit of analysis for this study. Data analysis was conducted using partial least squares (PLS) structural equation modelling techniques. In this research, empirical support was found for most of the research hypotheses and conclusions of the study is derived. An investigation into trust as a concept is used to denote relationship intensity, as the central construct of the framework. The validated conceptual framework and tested hypothesis results are the main contributions of this study. The results of this study will also be useful in terms of adopting the conceptual framework linked with hypotheses as a point of reference to begin with, in order to accomplish a healthy exchange relationship. However, a further deep dive and fine tuning the sub-units/composition characteristics of each critical factor may be needed for individual outsourcing initiative(s). This study is particularly relevant to the client-supplier firms already engaged in a relationship but can also be useful to those clients who are planning to begin their journey in IT offshoring in the near future, as a preparatory platform

    An Examination of the Deaf Effect Response to Bad News Reporting in Information Systems Projects

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    Information systems project management has historically been a problematic area. One of the reasons for this has been the issue of escalation where resources continue to be committed to a failing course of action. While many causes of escalation have been proposed, this dissertation investigates one possible cause: that the project manager may not hear, ignores or overrules a report of bad news to continue a failing course of action: the Deaf Effect response to bad news reporting. This effect has not been previously studied within the information systems literature. In this dissertation, the Deaf Effect is examined through a series of three laboratory experiments and a case study. It finds that in a conducive environment, where the bad news reporter is not seen as credible, and the risk of project failure is seen as low, decision makers tend to view the report of bad news as irrelevant and thus ignore or overrule the report of bad news and continue the current course of action. Role Prescription of the bad news reporter, illusion of control and a perception of a highly politicized environment are factors that also increase the occurrence of the Deaf Effect

    Of Incentive, Bias, and Behaviour: An Empirical Economic Investigation into Project Delivery Constructs Influencing the Adoption of Building Information Modelling

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    Building Information Modelling (BIM) is a collaborative construction platform allowing for digital databases, real-time change management, and a high degree of information reuse catalysing increased quality of work, enhanced productivity, and lower costs. Yet, overall adoption rates within industry remain vexingly low. Integrated Project Delivery (IPD) is currently the only contractual incentive vehicle available for BIM, and indeed the full potential of both are only realised when employed together; even so, uptake rates of IPD exist even lower. In response, this research evaluates hitherto ill-explored factors influencing the adoption of BIM by empirically testing hypotheses related to the impacts of three compounding theories upon the BIM decision calculus. Specifically, the incentive theory, the theory of acceptance and use of technology (UTAUT), and the status quo bias model. The research approaches BIM adoption holistically at the organizational, individual, transactional, and behavioural levels through a mixed design combining five quantitative, cross-sectional, questionnaire-based studies and one interview-based pre-test/post-test case study with sample populations including a Fortune 100 contractor, internationally renowned trade groups, and arguably the most progressive municipal construction client in the world. Data was collected using purposive sampling and analysed quantitatively through Structural Equation Modelling (SEM) and qualitatively with Directed Content Analysis (DCA). Primary conclusions are that BIM decisions are hierarchical; BIM adoption involves a general higher-level decision-making requiring stakeholders’ consensus; BIM utilization involves a specific lower-level decision-making with managerial discretion; economic incentives and competitive pressure influence higher-level decisions; non-economic factors influence lower-level decisions but are moderated by organizations’ type and size; organizations’ size and the degree of managerial discretion are inversely related; strength of the effects vary across and within the three theory-based factors that influence BIM adoption; and the effects of leadership and organizational culture remain unaccounted for and require investigation
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