Strategic Response to Institutional Influences on Information Systems Outsourcing

Abstract

This paper underscores the importance of examining strategic response to institutional influences in light of hypercompetition. Focusing on the banking industry, which is hypercompetitive and highly institutionalized, affords a unique opportunity to understand how individual corporations in such an industry respond strategically to institutional pressures. We examine critical contingencies arising from hypercompetition that moderate institutional influences on information systems outsourcing in commercial banks. Using data from 226 banks and hierarchical moderated regression analyses, we show that the propensity of banks to conform to or resist institutional pressures depends on the nature of institutional pressures, perceived gain in production economies, financial capacity to resist institutional influences, and transaction cost considerations.