OUTSOURCING AND MARKET VALUE OF THE FIRM: TOWARD A COMPREHENSIVE MODEL |
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| Authors: | Pankaj Nagpal Andreas I. Nicolaou Kalle Lyytinen |
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| Affiliation: | 1. Department of Accounting, School of Business, Central Connecticut State University, New Britain, CT, USA;2. Department of Accounting & MIS, College of Business, Bowling Green State University, Bowling Green, OH, USA;3. Weatherhead School of Management, Case Western Reserve University, Cleveland, OH, USA |
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| Abstract: | We analyze the effect of buyer, contract, and vendor characteristics on abnormal stock returns among firms that have announced large scale Information Technology (IT) and Business Process outsourcing (BPO) contracts. We draw upon a comprehensive dataset on outsourcing announcements, augmented with data from public sources. Salient buyer factors examined include use of a wide range of organizational controls. On the vendor side, we examine the impact of vendor size, contract size and reputation. Our study shows that use of behavior controls, outcome controls (negative), vendor reputation, and industry of buyer firm affect market value. When limited to buyer related factors, use of behavior and clan controls is positively related to abnormal returns around IT outsourcing announcements. An interesting finding is that IT and BPO success require different sets of controls. Copyright © 2014 John Wiley & Sons, Ltd. |
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| Keywords: | IT outsourcing business process outsourcing event study organizational controls median regression |
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