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The Role of Vendor Legitimacy in IT Outsourcing Performance: Theory and Evidence

Author

Listed:
  • Carol Hsu

    (University of Sydney, Sydney, New South Wales 2006, Australia)

  • Jae-Nam Lee

    (Korea University Business School, Seoul 136-701, Korea)

  • Yulin Fang

    (Faculty of Business and Economics, The University of Hong Kong, Hong Kong SAR, China)

  • Detmar W. Straub

    (Temple University, Hayesville, North Carolina 28904)

  • Ning Su

    (Ivey Business School, Western University, London, Ontario N6G 0N1, Canada)

  • Hyun-Sun Ryu

    (Institute for Artificial Intelligence and Software, SoonChunHyang University, Asan-si 31538, Korea)

Abstract

Information technology (IT) outsourcing relationships today are facing increasingly turbulent environments. With rapid changes in technological, commercial, societal, and regulatory landscapes, client firms have to closely and continually assess the desirability and appropriateness, or legitimacy, of their vendors in such dynamic settings. In this research, the focus is on client firms’ perceived legitimacy of vendors, termed “vendor legitimacy.” Specifically, building on institutional theory, vendor legitimacy is conceptualized as consisting of three dimensions—pragmatic, moral, and cognitive—and is examined through their respective impacts on IT outsourcing performance. The role of key governance strategies for managing vendor legitimacy, namely, contractual governance and relational governance, are likewise explored. Results from a multiple-sourced, matched-pair, cross-industry sample of executives and managers of 185 client firms reveal that these various governance strategies exert differential impacts on the aforementioned dimensions of vendor legitimacy, which, in turn, drive performance.

Suggested Citation

  • Carol Hsu & Jae-Nam Lee & Yulin Fang & Detmar W. Straub & Ning Su & Hyun-Sun Ryu, 2022. "The Role of Vendor Legitimacy in IT Outsourcing Performance: Theory and Evidence," Information Systems Research, INFORMS, vol. 33(1), pages 337-361, March.
    • Handle: RePEc:inm:orisre:v:33:y:2022:i:1:p:337-361
    DOI: 10.1287/isre.2021.1059
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