Does Dombergers Theory of the Contracting Organization Explain Satisfaction with IT Outsourcing

Abstract

The paper tests whether what appears to be a strong general theory of why organizations choose to acquire goods and services through contracting rather than in-house service provision, namely Dombergerís theory of the Contracting Organization, applies in an IT context. The validity of that theory is tested using data from a survey of 235 senior IT managers. The paper concludes that, in a field still searching for appropriate theory, Dombergerís work does indeed provide a very useful lens for understanding IT outsourcing. His four types of benefit of contractingóspecialization, market discipline, flexibility, and cost savingóemerge as a concise summary of senior IT managersí explanations of why their organizations chose to outsource IT. The paper also tests Dombergerís theory against IT outsourcing outcomes, and further develops a model of organizational satisfaction with IT outsourcing based on Dombergerís four factors. Three hold up, but cost savings were not important in explaining organizational satisfaction with IT outsourcing for either smaller or larger organizations. This outcome is explained in terms of the performance influencing factors inherent in Dombergerís own model, in the distinctive difficulties inherent in managing IT, and in the location, time period, and context of the research data used by our study.

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