Escaping ‘localisms’ in IT sourcing: tracing changes in institutional logics in an Italian firm

Abstract

Organizations are limited in their choices by the institutional environment in which they operate. This is particularly true for IT sourcing decisions that go beyond cost considerations and are constrained by traditions, geographical location, and social networks. This article investigates how a company can disentangle itself from the constraints of the institutional environment. We do so drawing on a longitudinal case study of an Italian SME active in the steel industry that successfully changed its institutionally sound, but increasingly inefficient, IT sourcing practice. Our main result suggests that by attending steadily to institutional logics, organizations can become selective in how the institutional environment influences them and act more purposefully in their decisions. In particular, through the creation of companywide IT management competencies and targeted hiring practices, organizations can strike a balance between the different institutional logics guiding IT sourcing decisions and eventually shift from the dominant logic of localism to a logic of market efficiency. This change does not depend from a choice but rather builds on a process through which IT management competences are slowly integrated in the organization.

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