Outsourcing of Information Systems Functions in Small and Medium Sized Enterprises: A Test of a Multi-Theoretical Model

This paper, selected for the category “Best papers from 1959 to 2008”, was first published in WIRTSCHAFTSINFORMATIK 43(4)2001:339–350 and has been revised for reprint. The paper examines the situation of information systems (IS) outsourcing in a business sector intrinsic to small and medium sized enterprises (SMEs). A survey among German SMEs in a specific manufacturing industry yielded the following results: Overall, the share of IS outsourcing in SMEs may be categorized as moderate. The IS functions in SMEs are selectively outsourced, i. e., the degree of outsourcing varies across different IS functions. Whereas applications development makes up the largest share, planning and management tasks/functions remain mostly within the boundaries of the firm. An assessment of internal resource deficits vis-à-vis external service providers establishes the predominant determinant which explains the varying degrees of outsourcing IS functions. Contrastingly, transaction costs and an assessment of the strategic significance of the respective IS functions seem to play a subordinate role.