Social Networks and Contract Enforcement in IT Outsourcing

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Executive Summary

Most prior research on Information Technology Outsourcing has characterized the dominant governance modes as either 'Formal' or 'Relational,' which rely on stringent assumptions of perfect foresight or about the extent to which one party can punish unilateral deviations by the other. Based on a large dataset of publically announced IT Outsourcing arrangement, the paper examined the role that structural embeddedness can play in predicting contract duration and the likelihood of contract renewal. Its preliminary results are very encouraging. It finds evidence suggesting that network position does matter in predicting contract structure over and above the traditional economic variables.

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