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Structure of service level agreements (SLA) in IT outsourcing: The construct and its measurement

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  • Jahyun Goo

    (Florida Atlantic University)

Abstract

The increased reliance of companies on IT outsourcing has turned management attention to a set of skills of managing relationships with service providers. While some recent studies have shown that the contracting ability to effectively manage relational exchanges can improve various dimensions of organizational performance, there has been relatively little analysis of how firms strategically use contracts to successfully manage their interfirm relationships. As an extension of past studies emphasizing the importance of the contract and service level agreements (SLA), the study develop an inclusive and conceptually sound framework for structuring SLA in IT outsourcing arrangements drawing upon control theory. Along with a careful description of measurement development as well as rigorous statistical validations, it contributed to instrument development for a set of 11 first-order SLA contractual factors and their relationships with three second-order substantive factors. The results of the study are framed as a tool for benchmarking SLA structuring efforts as well as a foundation for the future study of managing IT outsourcing relationships. The study suggests empirically testing of (1) the complementarity or substitutability between formal contract and relational governance, (2) institution based trust as an initial trust building mechanism, and (3) IT outsourcing success from a contractual perspective as potential areas of future research using the results of the study.

Suggested Citation

  • Jahyun Goo, 2010. "Structure of service level agreements (SLA) in IT outsourcing: The construct and its measurement," Information Systems Frontiers, Springer, vol. 12(2), pages 185-205, April.
    • Handle: RePEc:spr:infosf:v:12:y:2010:i:2:d:10.1007_s10796-008-9067-6
    DOI: 10.1007/s10796-008-9067-6
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    3. Chul Ho Lee & Xianjun Geng & Srinivasan Raghunathan, 2013. "Contracting Information Security in the Presence of Double Moral Hazard," Information Systems Research, INFORMS, vol. 24(2), pages 295-311, June.
    4. Yeh, Wen-Chih & Tseng, Ming-Hsun & Lee, Chun-Chang, 2018. "Effects of Organizational Control, Trust, Relationship Commitment, and Partnerships on Relationship Performance in the Business Waste Industry," International Journal of Asian Social Science, Asian Economic and Social Society, vol. 8(10), pages 881-897, October.
    5. Chulhwan Chris Bang, 2015. "Information systems frontiers: Keyword analysis and classification," Information Systems Frontiers, Springer, vol. 17(1), pages 217-237, February.
    6. Ajay Kumar Behera & Narayan C. Nayak & Harish C. Das, 2016. "Performance of Indian Service Industries Due to IT Adoption," Global Business Review, International Management Institute, vol. 17(5), pages 1073-1093, October.
    7. Kwahk, Kee-Young & Ahn, Hyunchul & Ryu, Young U., 2018. "Understanding mandatory IS use behavior: How outcome expectations affect conative IS use," International Journal of Information Management, Elsevier, vol. 38(1), pages 64-76.
    8. Simy Joy, 2021. "Intra- and inter-organizational controls in outsourcing: Controlees’ perspectives," Working papers 470, Indian Institute of Management Kozhikode.

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