Knowledge that Transforms

This paper studies economic determinants of IS outsourcing. It argues that a focus on comparative economic theories and models can improve our ability to explain outsourcing within the larger context of organizational strategy and environment. Specifically, the research constructs of production cost, transaction cost, and financial slack are examined simultaneously to understand what influences the outsourcing decision. To empirically test these relationships, information was gathered from senior IT managers in 243 U.S. banks. Financial indices from the archives of the Federal Reserve Bank were a second important source of data. Results of the study show that IS outsourcing in banks was strongly influenced by production cost advantages offered by vendors. Transaction costs played a role in the outsourcing decision, but they were much smaller than production costs. Finally, financial slack was not found to be a significant explanator, although firm size was a significant control factor. The paper has important implications for research and practice. For researchers, the findings provide evidence that financial criteria can be key factors in outsourcing decisions and compare the relative effects of production and transaction costs. For practitioners, the findings suggest that managerial sourcing strategies need to weigh both costs when hiring systems integrators.

This paper examines the role of computer-aided systems (CAS) for enhancing organizational learning in distributed environments. The basic research questions are: how do features of CAS enhance organizational learning, and how does organizational context influence the role of CAS in organizational learning? The theoretical framework focuses on the decision to contribute and adopt knowledge in distributed environments. Specifically, the paper investigates the intersections between the features of CAS and inhibitors to contributing or adopting knowledge, in the light of different organizational context variables. Two cases of information environments for knowledge sharing are examined: a formal electronic library system and an informal community that uses a variety of communication technologies. The cases are used to illustrate how the intersection between CAS features and the decisions to adopt and contribute enhance or inhibit knowledge sharing.

The likelihood that the firm’s information systems are insufficiently protected against certain kinds of damage or loss is known as “systems risk.” Risk can be managed or reduced when managers are aware of the full range of controls available and implement the most effective controls. Unfortunately, they often lack this knowledge, and their subsequent actions to cope with systems risk are less effective than they might otherwise be. This is one viable explanation for why losses from computer abuse and computer disasters today are uncomfortably large and still so potentially devastating after many years of attempting to deal with the problem. Results of comparative qualitative studies in two information services Fortune 500 firms identify an approach that can effectively deal with the problem. This theory-based security program includes (1) use of a security risk planning model, (2) education/training in security awareness, and (3) Countermeasure Matrix analysis.

The failure of SPRINTEL, an interorganizational information system in Prato (Italy), raises a number of interesting questions with regard to the technical-economic and socio-political perspectives that currently dominate the information systems/information technology literature. These questions underscore the importance of developing additional theoretical perspectives in order to better understand the role of information systems in organizations. This article reflects upon these questions and their theoretical foundations in the context of a case study. The case study describes the implementation, usage, and outcome of an interorganizational information system. An analysis is made of the extent to which the technical-economic and socio-political perspectives are sufficient to explain the failure of this system. The outcome of the analysis shows that these two perspectives are insufficient to provide an explanation. Based on the literature from a variety of sources, a third, complementary, perspective is developed. Like the socio-political perspective (Kling 1980), this perspective is also an interactionist perspective. However, instead of focusing on politics and conflict as the primary interaction mode, it focuses on collaboration and cooperation as the key to understanding interaction processes. This perspective introduces a third rationality of information systems in which trust, social capital, and collaborative relationships become the key concepts for interpretation.