Sourcing structures and the execution efficiency of information technology projects: A comparative evaluation using stochastic frontier analysis

Anant Mishra, Kingshuk K. Sinha, Sriram Thirumalai, Andrew Van de Ven

Research output: Contribution to journalArticlepeer-review

5 Scopus citations

Abstract

In the pursuit of low-wage labor and access to technical talent, information technology (IT) projects today are often executed with sourcing structures that span the boundaries of a firm, a country, or both. Although the strategic implications of sourcing structures have received considerable attention in theory and practice, their implications from a project execution standpoint—specifically, in terms of execution efficiency—remain under-researched. Based on a large primary dataset on IT projects with distributed sourcing structures, this paper documents the findings of a theoretically grounded, empirical investigation using stochastic frontier analysis that evaluates whether and to what extent does the execution efficiency of projects vary across various types of sourcing structures (namely, Domestic-Insourcing, Domestic-Outsourcing, Offshore-Insourcing, and Offshore-Outsourcing). The results provide support for differential effects of crossing a firm or country boundary, or both boundaries, on the execution efficiency of IT projects. Specifically, we find that the execution efficiency of IT projects is significantly lower when their sourcing structures cross a country boundary (Offshore-Insourcing and Offshore-Outsourcing) relative to when their sourcing structures do not cross a country boundary (Domestic-Insourcing and Domestic-Outsourcing). Notwithstanding these trends across sourcing structures, a split-sample analysis of execution efficiency levels reveals that each structure presents a viable alternative for managers to realize high levels of execution efficiency. Finally, additional analysis highlights the benefits of sourcing structure capabilities—as represented by the extent of risk management planning and agile project management—in improving execution efficiency in IT projects that cross a country boundary.

Original languageEnglish (US)
Pages (from-to)281-309
Number of pages29
JournalJournal of Operations Management
Volume66
Issue number3
DOIs
StatePublished - Apr 1 2020

Bibliographical note

Funding Information:
The authors gratefully acknowledge Greg Heim's (Department Editor, Management of Technology) detailed guidance on improving both the substance and exposition of the paper to make it publishable. The authors thank the anonymous senior editor and two anonymous reviewers for their many constructive comments and suggestions that have significantly helped in the development of the paper. Earlier versions of the paper were presented in seminars at Emory University, Georgia Institute of Technology, McGill University, George Washington University, University of Wisconsin?Madison, George Mason University, Cambridge University, Erasmus University, and University of Minnesota, and benefited greatly from the feedback provided by attendees in these seminars. The authors are indebted to the Project Management Institute's Information Systems group and New Product Development group, Kimberly Johnson, Mary Walker, and Paul Krebs for their assistance in data collection.

Publisher Copyright:
© 2019 Association for Supply Chain Management, Inc.

Keywords

  • agile project management
  • execution efficiency
  • offshoring
  • outsourcing
  • risk management
  • sourcing structure

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