Sunk Cost and Target Achievement Biases in Subsequent IS-Outsourcing Decisions

Early IS-outsourcing research is mainly based on three assumptions: the research results are normative, the decision maker acts in a completely rational manner, and the decision is made at a single point in time. Within the last decade, some of these assumptions have been softened, and studies have attempted to broaden the research by investigating the IS-outsourcing decision process from a more descriptive point of view. Our aim is to extend IS-outsourcing research from a static and mostly rational view to a continuous view with decisions that are influenced by non-rational biases. In this research-in-progress paper, which delineates the conceptual foundation for a larger ongoing research project, we present a research model that depicts some of these non-rational biases based on path dependencies between subsequent decisions. The model states two propositions that can be logically derived from cognitive dissonance and prospect theory: sunk cost influences the adherence of a decision maker to the chosen course of action, and the degree of target achievement of a previous decision influences the risk tolerance of the decision maker in an ensuing decision. An upcoming empirical study using an experimental setting will be conducted to confirm these hypotheses.