The Impact of I.T. on the Degree of Outsourcing, the Number of Suppliers, and the Duration of Contracts

Eric K. Clemons and Sashidhar P. Reddi

Center for Financial Institutions Working Papers from Wharton School Center for Financial Institutions, University of Pennsylvania

Abstract: It has long been accepted within theinformation technology (IT) researchcommunity that IT should have a profoundimpact on industrial organization. However,there has been as yet on the changes to be expected in the design of firms or industries; rather, there is an apparently inconsistent collection of conjectures and analyses. We are now able to offer an integrative framework for describing the impacts of IT on an industrial organization. Our analyses generally support the "move to the middle" hypothesis that states that the impact of IT on the organization of economic activity is to lead to a greater degree of outsourcing where this increased outsourcing is done from fewer suppliers with whom the buyer has long-term relationships.

Date: 1994-01
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