TY - JOUR
T1 - On buyer selection of service providers in online outsourcing platforms for IT services
AU - Hong, Yili
AU - Pavlou, Paul A.
N1 - Funding Information:
The authors thank the senior editor and associate editor for a constructive and developmental review process. The authors also thank the anonymous reviewers for their helpful comments and suggestions. Finally, the authors thank Matt Barrie, Pei-yu Chen, Lorin Hitt, Ni Huang, Sanat Sarkar, Sunil Wattal, and seminar participants at the University of Virginia, Nanyang Technological University, Arizona State University, University of Florida, the 2012 International Conference on Information Systems, and the 2013 Statistical Challenges in eCommerce Research for valuable feedback. The authors acknowledge financial support from CIBER (Center for International Business Education and Research) through the U.S. Department of Education and the Fox School’s Young Scholar’s Forum at Temple University.
Funding Information:
The authors thank the senior editor and associate editor for a constructive and developmental review process. The authors also thank the anonymous reviewers for their helpful comments and suggestions. Finally, the authors thank Matt Barrie, Pei-yu Chen, Lorin Hitt, Ni Huang, Sanat Sarkar, Sunil Wattal, and seminar participants at the University of Virginia, Nanyang Technological University, Arizona State University, University of Florida, the 2012 International Conference on Information Systems, and the 2013 Statistical Challenges in eCommerce Research for valuable feedback. The authors acknowledge financial support from CIBER (Center for International Business Education and Research) through the U.S. Department of Education and the Fox School's Young Scholar's Forum at Temple University.
Publisher Copyright:
© 2017 INFORMS.
PY - 2017/9/1
Y1 - 2017/9/1
N2 - The Internet has presumably created a level playing field that allows any service provider across the globe to compete for contracts on online outsourcing platforms for information technology (IT) services. In this paper, we empirically examine (a) how country (language, time zone, cultural) differences and the country's IT development affect buyers' selection of service providers in online outsourcing platforms; and (b) how the reputation of service providers moderates the proposed effects of country differences and the country's IT development. We integrated a unique data set formed by a sample of 11,541 software development projects from an online outsourcing platform matched with archival sources on the language, time zone, culture, and IT development of countries. Since price is typically endogenous in any supply demand system, we used the exogenous variation of the normalized exchange rate of the currency among countries, as a "cost-shifter" type instrumental variable (IV) for econometric identification. Our panel data analyses results (both with and without IV) show that buyers are negatively affected by country differences in terms of language, time zone, and culture, and prefer service providers from countries with higher IT development. Notably, the reputation of service providers attenuates the negative effects of language and cultural (but not time zone) differences, while it substitutes the positive effect of the country's IT development. We discuss the study's theoretical and managerial implications for understanding the global dynamics of online outsourcing platforms and better designing these platforms.
AB - The Internet has presumably created a level playing field that allows any service provider across the globe to compete for contracts on online outsourcing platforms for information technology (IT) services. In this paper, we empirically examine (a) how country (language, time zone, cultural) differences and the country's IT development affect buyers' selection of service providers in online outsourcing platforms; and (b) how the reputation of service providers moderates the proposed effects of country differences and the country's IT development. We integrated a unique data set formed by a sample of 11,541 software development projects from an online outsourcing platform matched with archival sources on the language, time zone, culture, and IT development of countries. Since price is typically endogenous in any supply demand system, we used the exogenous variation of the normalized exchange rate of the currency among countries, as a "cost-shifter" type instrumental variable (IV) for econometric identification. Our panel data analyses results (both with and without IV) show that buyers are negatively affected by country differences in terms of language, time zone, and culture, and prefer service providers from countries with higher IT development. Notably, the reputation of service providers attenuates the negative effects of language and cultural (but not time zone) differences, while it substitutes the positive effect of the country's IT development. We discuss the study's theoretical and managerial implications for understanding the global dynamics of online outsourcing platforms and better designing these platforms.
KW - Country IT development
KW - Country differences
KW - IT services
KW - Online outsourcing platforms
KW - Reputation
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U2 - 10.1287/isre.2017.0709
DO - 10.1287/isre.2017.0709
M3 - Article
AN - SCOPUS:85035361015
SN - 1047-7047
VL - 28
SP - 547
EP - 562
JO - Information Systems Research
JF - Information Systems Research
IS - 3
ER -