Factors Affecting E-Mail Marketing Sourcing Decisions: A Transaction Cost Perspective

Electronic marketing strategy is an important priority for e-business, but limited research has been undertaken to understand and predict decisions regarding the insourcing or outsourcing of these marketing activities. This study focuses specifically on e-mail marketing and uses an established seven function classification of the activities which include: designing, building, testing, deploying, tracking, reporting, and analyzing. Transaction cost theory was employed as a predictor of insourcing and outsourcing decisions for each of these e-mail marketing activities. To test these functions, case studies were used for tracking the value of two attributes of transactions–asset specificity and uncertainty (behavioural uncertainty, environmental volatility, and environmental diversity)–under three levels of analysis. Results show that specific skills and tacit knowledge used to manage functions are major factors for sourcing decisions, and overpower the effect of uncertainty. It was also found that companies consider an outsourcing option for each individual function rather than the combined or whole e-mail marketing functions. The paper concludes with a discussion of limitations, implications for academics and practitioners, and future research directions.