Abstract

Netsourcing describes an eBusiness subset of overall IT outsourcing, in which companies can selectively source software applications from external providers via the Internet. Companies which netsource seem to enjoy cost and flexibility improvements compared to those which develop and operate software applications in-house. For investigating netsourcing, we draw on full outsourcing research for a possible theoretical grounding. Literature on IT outsourcing offers several research streams suggesting determinants and explaining value creation through and pitfalls due to IT outsourcing. In order to narrow those perspectives down, we use a research framework based on two theoretical approaches, strategic management and transaction cost economics. We survey a sample of the 500 largest German companies to investigate netsourcing determinants. Competitive relevance of an application, strategic vulnerability, technical specificity, human capital specificity, transaction frequency, and transaction uncertainty are supported as determinants of a company's netsourcing decision. After some lessons learned and the respective managerial implications, we point to some conceptual limitations of the study and conclude with a summary and a research outlook.

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