The Information Technology Outsourcing Risk: A Transaction Cost and Agency Theory-Based Perspective

Authors

Bouchaib Bahli, Decision Sciences and Management Information Systems, The John Molson School of Business, Concordia University, Montreal, Canada H3G 1M8
Suzanne Rivard, HEC Montreal, 3000 Chemin de la Cote-Ste-Catherine, Montreal, Canada H3T 2A7

Document Type

Research Article

Abstract

Many firms have adopted outsourcing in recent years as a means of governing their information technology (IT) operations. While outsourcing is associated with significant benefits, it can also be a risky endeavour. This paper proposes a scenario-based conceptualization of the IT outsourcing risk, wherein risk is defined as a quadruplet comprising a scenario, the likelihood of that scenario, its consequences and the risk mitigation mechanisms that can attenuate or help avoid the occurrence of a scenario. This definition draws on and extends a risk assessment framework that is widely used in engineering. The proposed conceptualization of risk is then applied to the specific context of IT outsourcing using previous research on IT outsourcing as well as transaction cost and agency theory as a point of departure.

DOI

10.1080/0268396032000130214

Recommended Citation

Bahli, Bouchaib and Rivard, Suzanne (2003) "The Information Technology Outsourcing Risk: A Transaction Cost and Agency Theory-Based Perspective," Journal of Information Technology: Vol. 18: Iss. 3, Article 5.
DOI: 10.1080/0268396032000130214
Available at: https://aisel.aisnet.org/jit/vol18/iss3/5