Intra-organizational information asymmetry in offshore ISD outsourcing

• Published in: VINE. Very informal newsletter on library automation Vol. 44; no. 1; pp. 94 - 120
• Main Authors: Maduka Nuwangi, Subasinghage, Sedera, Darshana, C. Srivastava, Shirish, Murphy, Glen
• Format: Journal Article
• Language: English
• Published: Bradford Emerald Group Publishing Limited 2014; Emerald
• Subjects: Asymmetry; Clarity; Communication; Construction; Consultants; Contracting out; Exact sciences and technology; General aspects; Information & knowledge management; Information and communication sciences; Information science. Documentation; Information systems; Knowledge; Knowledge management; Knowledge management systems; Management consultants; Offshore; Offshore construction; Offshore engineering; Offshore structures; Operations management; Outsourcing; Partnering; Projects; Sciences and techniques of general use; Software development; Software services; Studies; Surveys; Systems development; Theory; Europe; Offshore outsourcing; Information asymmetry; Information system development; Agency theory; Information system; Theory; Development; Outsourcing; Information
• ISSN: 0305-5728; 2059-5891; 1474-1032; 2059-5905
• DOI: 10.1108/VINE-04-2013-0023

Purpose – Contemporary offshore information system development (ISD) outsourcing is becoming even more complex. Outsourcing partner has begun “re-outsourcing” components of their projects to other outsourcing companies to minimize cost and gain efficiencies. This paper aims to explore intra-organizational information asymmetry of re-outsourced offshore ISD outsourcing projects. Design/methodology/approach – An online survey was conducted to get an overall view of information asymmetry between principal and agents (as per the agency theory). Findings – Statistical analysis showed that there are significant differences between the principal and agent on clarity of requirements, common domain knowledge and communication effectiveness constructs, implying an unbalanced relationship between the parties. Moreover, the authors' results showed that these three are significant measurement constructs of information asymmetry. Research limitations/implications – In this study the authors have only considered three main factors as common domain knowledge, clarity of requirements and communication effectiveness as three measurement constructs of information asymmetry. Therefore, researches are encouraged to test the proposed constructs further to increase its precision. Practical implications – The authors' analysis indicates significant differences in all three measurement constructs, implying the difficulties to ensure that the agent is performing according to the requirements of the principal. Using the agency theory as theoretical view, this study sheds light on the best contract governing methods which minimize information asymmetry between the multiple partners within ISD outsourcing organizations. Originality/value – Currently, to the best of the authors' knowledge, no study has undertaken research on intra-organizational information asymmetry in re-outsourced offshore ISD outsourcing projects.