Global Sourcing of Information Systems Development - Explaining Project Outcomes Based on Social, Cultural, and Asset-Related Characteristics

Based on Practice Theory and Transaction Cost Economics, we integrate three perspectives of prior research: we explain the relation between the outcome of offshore ISD projects and cultural, social, as well as asset-related project characteristics. We substantiate and refine our model with a multiple-case study of eight projects in which German companies offshored ISD tasks to China, India, Eastern, and Central Europe. We find that the project outcome is heavily dependent on the relationship quality of the partners which in turn depends heavily on habitus differences and the social distance between them. Two management practices, namely boundary spanning and offshore partner empowerment, can reduce the negative impacts of these factors. Moreover, we find that the required transfer of client-specific knowledge can have negative effects on the project outcome. However, the observed effects do not match the traditional explanation given by Transaction Cost Economics. Instead, the explanation of Practice Theory fits the data: the specific knowledge is embedded in a socio-cultural field of struggle and constitutes a valuable resource.