Enterprise Systems Outsourcing “Behind the Curtain”: A Case Study Showing How Rational and Institutional Explanations Coexist and Complement Each Other

Enterprise Systems Outsourcing “Behind the Curtain”: A Case Study Showing How Rational and Institutional Explanations Coexist and Complement Each Other

Per Svejvig (Aarhus School of Business, Denmark) and Jan Pries-Heje (Roskilde University, Denmark)
Copyright: © 2011 |Pages: 17
DOI: 10.4018/jeis.2011010101

Abstract

Outsourcing is now a feasible means for enterprise systems (ES) cost savings, but does however increase the complexity of coordination substantially when many organizations are involved. We set out to study ES outsourcing in a large Scandinavian high-tech organization, SCANDI, a case setting with many inter-organizational partners, trying to answer the question: Why does SCANDI engage in these very complex outsourcing arrangements? To answer this question we have analyzed documents, observed meetings and gathered data from interviews in four parts of SCANDI. The first data analysis found just the rational front stage cost-saving explanation; but then, with a more careful analysis focusing on institutional factors, other backstage explanations “behind the curtain” were uncovered, such as management consultants with a “best practice” agenda, people promoting outsourcing, thereby being promoted themselves, and a belief in outsourcing as a “silver bullet”: a recipe to success, solving everything
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Rational And Institutional Explanations

The theories used in this study have evolved over time in reaction to our progressive understanding of data collected during field work. Rational explanations were easily identifiable, and institutional explanations resulted from searching for “behind the curtain” explanations while interpreting the field data and IS literature. Two alternative theories were then adopted for this research: (1) Transaction Cost Theory (TCT), and (2) Institutional Theory (INT).

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