How Do IT Outsourcing Vendors Respond to Shocks in Client Demand? A Resource Dependence Perspective

Authors

Fang Su, School of Business, Renmin University of China, Beijing, China
Ji-Ye Mao, School of Business, Renmin University of China, Beijing, ChinaFollow
Sirkka L Jarvenpaa, Center for Business, Technology and Law, University of Texas at Austin, Austin, TX, USA

Document Type

Research Article

Abstract

IT outsourcing vendors depend on projects from their clients to reap gains and develop capabilities. Because of this dependence, vendors are vulnerable to shocks in client demand. However, the extant literature on how vendors mitigate the damage from demand shocks is very limited. This multiple case study examined five pairs of relationships between Chinese vendors and their Japanese clients, drawing on resource dependence theory, which considers two response strategies: bridging and buffering. Our findings suggest that both bridging and buffering should be specified further on the basis of their explorative and exploitative dimensions, and that the choice of a particular strategy depended on the power relation between the vendor and client. Results show that when the client was in a highpower advantage, the vendor chose bridging. More specifically, if the vendor also had high power, it adopted explorative bridging; otherwise, it adopted exploitative bridging. When the client was in a low-power position, the vendor would pursue explorative buffering. Exploitative buffering was a common response to demand shocks, independent of the dyadic power relation.

DOI

10.1057/jit.2013.28

Recommended Citation

Su, Fang; Mao, Ji-Ye; and Jarvenpaa, Sirkka L (2014) "How Do IT Outsourcing Vendors Respond to Shocks in Client Demand? A Resource Dependence Perspective," Journal of Information Technology: Vol. 29: Iss. 3, Article 6.
DOI: 10.1057/jit.2013.28
Available at: https://aisel.aisnet.org/jit/vol29/iss3/6