Is Transaction Cost Economics Theory Able to Explain Contracts Used for and Success of Firm-Wide IT-Infrastructure Outsourcing?

Transaction cost economics (TCE) is much used in outsourcing research. We applied two TCE attributes - asset specificity and frequency - to characterise IT infrastructure services and to indicate what type of outsourcing contracts should be concluded. We classified outsourcing contracts of 213 enterprises to determine if TCE contracting recommendations were followed, and if outsourcing succeeded better when the contract type matched the IT infrastructure service characteristics. Results reveal that enterprises do not follow TCE contract recommendations. They probably should. In application services the match of contract type and service characteristics was positively related to absolute IT outsourcing success