Study On The Relationship Between Industry Environment And Software Development Outsourcing:A Dynamic Evolving Perspective

As an important dimension that influences firms' strategies,industry environment possesses significant implications for the decision making of firms' information technology(IT)investment.However,there is relatively limited research that devolves into the relationship between industry environment and firms' outsourcing decisions.By focusing on the software development outsourcing(SDO),I first take a close look at how three elements of industry environment,namely technology increase rate,market concentration degree and demand growth rate,will influence firms' SDO decisions.Then,based on a recent dynamic evolving perspective of the IT outsourcing market,I analyze how the evolvement of the IT outsourcing market would change the characteristics of SDO and its relationship with industry environment.Using industry-level data for U.S.private industries from 1998 to 2015,I find that there is a positive relationship between market concentration degree,demand growth rate and SDO tendency.What's more,the evolvement of the IT outsourcing market positively moderates the impacts of industry technology change rate,market concentration degree,and negatively moderates the impact of demand grow rate.The results confirm our arguments concerning the relationship between industry environment and SDO and provide implications for academic research and practitioners.