effects of initial and ongoing trust in it outsourcing: a bilateral perspective by jae-nam lee ,...

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JOURNAL ARTICLE PRESENTATION : CMGB 6322 Strategic Information Systems Prepared by: Alireza Khosroyar Effects of initial and ongoing trust in IT outsourcing: A bilateral perspective By Jae-Nam Lee , Byounggu Choi

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outsourcing contracts are often very complex, it is difficult to include all rules and agreements in the contract. interactions between the participants often go beyond rules and exceptions and depend on intangible factors ,such as trust and commitment

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Page 1: Effects of initial and ongoing trust in IT outsourcing: A bilateral perspective By Jae-Nam Lee , Byounggu Choi

J O U R N A L A R T I C L E P R E S E N TAT I O N :

CMGB 6322

Strategic Information Systems

Prepared by:

Alireza Khosroyar

Effects of initial and ongoing trust in

IT outsourcing: A bilateral perspectiveBy Jae-Nam Lee , Byounggu Choi

Page 2: Effects of initial and ongoing trust in IT outsourcing: A bilateral perspective By Jae-Nam Lee , Byounggu Choi

CMGB 6322-Strategic Information Systems

E F F E C T S O F I N I T I A L A N DO N G O I N G T R U S T I N I T O U T S O U R C I N G

PRESENTATION OUTLINE

• Introduction

• Theoretical Development

• Methodology

• Research Findings

• Managerial Implications

Page 3: Effects of initial and ongoing trust in IT outsourcing: A bilateral perspective By Jae-Nam Lee , Byounggu Choi

CMGB 6322-Strategic Information Systems

E F F E C T S O F I N I T I A L A N DO N G O I N G T R U S T I N I T O U T S O U R C I N G

Introduction- Background

• the global outsourcing market :

– US$340 billion in 2007,– increase to US$509 billion by 2012, – annual growth rate of 8.4%

• However, there have been few reports about its successful ROI.

• outsourcing contracts are often very complex, it is difficult to include all rules and agreements in the contract.

• interactions between the participants often go beyond rules and exceptions and depend on intangible factors ,such as trust and commitment

• More flexible relationship more trust

Page 4: Effects of initial and ongoing trust in IT outsourcing: A bilateral perspective By Jae-Nam Lee , Byounggu Choi

CMGB 6322-Strategic Information Systems

E F F E C T S O F I N I T I A L A N DO N G O I N G T R U S T I N I T O U T S O U R C I N G

Introduction – the importance of this research

• Prior studies generally are cross-sectional but this research studies the change of trust over time.

• Outsourcing from the perspectives of both participants.

– Service receiver

– Service provider

Page 5: Effects of initial and ongoing trust in IT outsourcing: A bilateral perspective By Jae-Nam Lee , Byounggu Choi

CMGB 6322-Strategic Information Systems

E F F E C T S O F I N I T I A L A N DO N G O I N G T R U S T I N I T O U T S O U R C I N G

Theoretical Development

• Initial trust vs. ongoing trust– Trust is a dynamic process.

• Example: Team cohesion

– it is process-oriented rather thanoutcome- or input-oriented concept.

• Initial Trust : is not based on any prior experience but on an assumption.

• Ongoing Trust : result from observing actual interaction . – It is likely to be modified over time due to

experiences and interactions with partners.

tendency of a group to remain united

Page 6: Effects of initial and ongoing trust in IT outsourcing: A bilateral perspective By Jae-Nam Lee , Byounggu Choi

CMGB 6322-Strategic Information Systems

E F F E C T S O F I N I T I A L A N DO N G O I N G T R U S T I N I T O U T S O U R C I N G

Theoretical Framework

Page 7: Effects of initial and ongoing trust in IT outsourcing: A bilateral perspective By Jae-Nam Lee , Byounggu Choi

CMGB 6322-Strategic Information Systems

E F F E C T S O F I N I T I A L A N DO N G O I N G T R U S T I N I T O U T S O U R C I N G

Research Methodology

415 After Eliminating

missing data

455 service receivers

responded (85%)

535 firms were

willing to participate

Phone call to 1750

Service receivers : 2000 large listed firms

215 After eliminating

missing data

232 responses

were received

Service Provider:

340Phase1 , Service Receiver

Phase 2 , Service Provider

189

After elimination

205

Received

340 Questioners

Sent

Phase2 , Service Receiver

148

After elimination

169 received

Phase1 , Service Provider

Phase 1 :

Phase 2:

Page 8: Effects of initial and ongoing trust in IT outsourcing: A bilateral perspective By Jae-Nam Lee , Byounggu Choi

CMGB 6322-Strategic Information Systems

E F F E C T S O F I N I T I A L A N DO N G O I N G T R U S T I N I T O U T S O U R C I N G

Findings

Service Provider Perspective

Service Receiver Perspective

Page 9: Effects of initial and ongoing trust in IT outsourcing: A bilateral perspective By Jae-Nam Lee , Byounggu Choi

CMGB 6322-Strategic Information Systems

E F F E C T S O F I N I T I A L A N DO N G O I N G T R U S T I N I T O U T S O U R C I N G

Managerial Implications

the role of ongoing trust and distrust is significant in understanding the success of IT outsourcing initiatives.

knowledge sharing would draw both the provider and the receiver together in a shared vision and provide a common goal.

increasing initial trusting belief

minimizing initial distrusting

belief

Forming appropriate

favorable expectations

Fostering an environment

that encourages ongoing positive

belief

SuccessfulOutsourcing