Journal of Information Technology Theory and Application (JITTA)


Information systems development (ISD) takes place within an economical context. However, the economical conditions that shape ISD practice have hardly been researched. In this paper we study how pricing affects ISD in practice. Based on data collected in the Danish IT industry we used a grounded theory approach to develop a model of the impact of pricing on ISD. The model was refined through the use of principal–agent theory and economic game theory in the form of the prisoner’s dilemma. The model describes the pricing structure, risk distribution, opportunistic behavior and their relationships as the elements that influence ISD practice. On this basis we argue for the uptake of new development approaches such as agile software development (ASD) to improve ISD practice and its outcomes.