Paper Type
ERF
Abstract
This study examines how firms’ dependence on external IT providers affects their ability to adopt and adapt AI technologies under data sovereignty regulatory shocks. We argue that high dependence on outsourced IT infrastructure from dominant “hyperscaler” vendors erodes a firm’s internal reconfiguration capabilities, widening the “sovereignty-adaptability gap”. We theorize that firm size moderates this relationship, with smaller firms experiencing stronger negative effects. The study contributes to literature by identifying institutional shocks as distinct triggers for reconfiguration and by shifting focus from cost-efficiency to adaptability under regulatory uncertainty.
Paper Number
1633
Recommended Citation
Abotsi, Benedict Lewis and Wang, Paul Yuke, "When Outsourcing Meets AI: How Externalizing IT Functions Shapes Firms’ AI Readiness under Data-Sovereignty Shocks" (2026). AMCIS 2026 Proceedings. 11.
https://aisel.aisnet.org/amcis2026/sig_dspe/sig_dspe/11
When Outsourcing Meets AI: How Externalizing IT Functions Shapes Firms’ AI Readiness under Data-Sovereignty Shocks
This study examines how firms’ dependence on external IT providers affects their ability to adopt and adapt AI technologies under data sovereignty regulatory shocks. We argue that high dependence on outsourced IT infrastructure from dominant “hyperscaler” vendors erodes a firm’s internal reconfiguration capabilities, widening the “sovereignty-adaptability gap”. We theorize that firm size moderates this relationship, with smaller firms experiencing stronger negative effects. The study contributes to literature by identifying institutional shocks as distinct triggers for reconfiguration and by shifting focus from cost-efficiency to adaptability under regulatory uncertainty.
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