The Impact of Firm Learning on Value Creation in Strategic Outsourcing Relationships
By Deepa Mani, Anitesh Barua
Journal of Management Information Systems | 2015
Citation
Mani, Deepa., Barua, Anitesh. (2013). The Impact of Firm Learning on Value Creation in Strategic Outsourcing Relationships Journal of Management Information Systems .
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Journal of Management Information Systems, 2013
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Abstract
Strategic outsourcing has emerged as a critical success factor to the modern firm. We investigate whether managers in outsourcing firms, through their prior experience in managing similar strategic alliances and prior association with the provider, learn to create value in their outsourcing initiatives. Value creation is estimated in terms of long-term abnormal stock returns to the outsourcing firm relative to an industry, size and book-to-market matched sample of control firms following the implementation of the outsourcing contract, announcement period returns, and allied wealth effects. We find that prior experience and prior association have a significant impact on long-term abnormal stock returns, suggesting that financial markets are slow to price learning effects in outsourcing. Further, while relational learning, through prior association with the provider, alone influences value creation in fixed price contracts associated with relatively simple outsourcing engagements, both procedural learning, through prior experience, and relational learning have an impact on value creation in variable price contracts associated with more complex initiatives. The results are consistent with the structure of risks and incentives in both types of contracts, and have implications for management of outsourcing engagements and their performance and valuation.

Professor Deepa Mani is Professor of Information Systems and the Deputy Dean of Academic Programmes & Digital Learning at the Indian School of Business. Deepa’s research interests are at the intersection of technology, organisation, and society. She has demonstrated significant thought leadership on the business and policy implications of technological innovations and investments. Her research articles have been published in leading academic journals and extensively featured in refereed conference proceedings, edited book chapters, and popular media outlets. Deepa serves as a Senior Editor at Information Systems Research. Deepa’s research has also had widespread impact on business practice and policy. In recognition of her impact, she was awarded the prestigious INFORMS Information Systems Society (ISS) Practical Impacts Award in 2022.

Deepa has been appointed to serve on several expert committees of the Central and State governments to provide guidance on policies for the digital economy, digital interventions in key sectors, and catalyse grassroot impacts using technology. She also extensively coaches organizations, keynotes corporate leadership events, and conducts executive education in the areas of digital business models, digital transformation and technology product management.

Deepa completed her undergraduate education at St. Stephen’s College, Delhi University, Masters in Information Systems from Carnegie Mellon University, Pennsylvania, and her doctorate in Information Systems from the University of Texas, Austin.

Deepa Mani (1)
Deepa Mani