Relational and structural embeddedness are reported to play an important role in the context of information technology outsourcing (ITO). However, we do not fully understand which of the two types of embeddedness is more appropriate in preventing opportunistic behaviour and improving long-term performance in the presence of uncertainty which is not uniform across a wide range of outsourced IT services and products. In order to address this question, a virtual ITO network is simulated where firms take the partner selection and control strategy based on relational or structural embeddedness. They also compete with each other to maximise their long-term profits. The simulation results show that the advantage of each type of embeddedness is different according to the levels of measurement difficulty and requirement unpredictability which coexist in the ITO business environments. Therefore, this study provides a better understanding of the conditional superiority of each type of embeddedness in the precence of the two uncertainties and offers ITO managers with a guideline for a choice between relational and structural embeddedness.
Oh, Jaeyoun; Lee, Habin; and Tsohou, Aggeliki, "Governance of IT Service Procurement: Relationship vs Network based Approach" (2013). PACIS 2013 Proceedings. 55.