How Organizational Identity influences Information Technology (IT) Outsourcing Success

Corporate Information Technology (IT) functions are under increasing pressure to succeed in their IT outsourcing (ITO) arrangements. Studies of ITO success have in the past mainly explored its operational and financial aspects. At the same time there is a dearth of research on broader organizational antecedents and outcomes of ITO. This study examines the effect of organizational identity on outsourcing success. Specifically, we ask: does the strength of an organization’s identityi.e. how unique it views its role in relation to other corporate functionsinfluence ITO success? We conduct an empirical study among 312 IT leaders engaged in outsourcing. We find that organizational identity strength mediates the effect of one pivotal outsourcing antecedent – effective knowledge sharing – on ITO Success. We thereby expose the role of identity strength as a potential determinant of ITO success and subsequently surmise that it is likely to have a material impact on the firm as a whole.