Capability,Quality, and Performance of Offshore IS Vendors: A Theoretical Framework and Empirical Investigation

Information systems (IS) offshoring has become a widespread practice and a strategic sourcing choice for many firms. While much has been written by researchers about the factors that lead to successful offshoring arrangements from the client's viewpoint, the vendor's perspective has been largely scarce. The vendor perspective is equally important as offshore IS vendors need to make important decisions in terms of delivering operational and strategic performance and aligning their resources and processes in order to meet or exceed targeted outcomes. In this article, we propose and test a three‐level capability–quality–performance (CQP) theoretical framework to understand vendor outcomes and their antecedents. The first level of the framework represents three vendor capabilities: relationship management, contract management, and information technology management. The second level has three mediating variables representing process quality: partnership, service, and deliverable quality. The third level has three dependent variables representing vendor outcomes: operational performance, strategic performance, and satisfaction. The model was tested with 188 vendor firms from India and China, the two most popular destinations for IS offshoring. Results support the CQP framework; vendor capabilities are significant predictors of intermediate quality measures, which in turn affect vendor outcomes. Implications of the study findings to both theory development and IS offshore vendor strategic decision making are discussed.     

Multilevel Social Dynamics Considerations for Project Management Decision Makers: Antecedents and Implications of Group Member Tie Development

Successful projects represent the effective culmination of management skills, planning, and individual project member strengths. In operations management, such strengths are often viewed predominantly from the perspective of skill base. However, it has become increasingly evident that behavioral traits associated with individuals play a very significant, if not ultimately dominating, role in the effectiveness of certain group projects. Our aim in this study is to look into how certain individual attributes viewed as relevant to these project contexts may lead to social networking decisions that have impacts spanning multiple levels of analysis. Such insights are likely to prove valuable to decision makers managing project teams as well. We employ a controlled 4‐month investigation of multiple projects, for which we are able to consider both objective, and subjective pre‐, in situ, and postproject data. Our results demonstrate that the issues of perceived control, confidence, and conscientiousness are relevant not only in driving individual perceptions of the value of within‐group interactions, and hence the development of associated ties, but are also ultimately relevant in helping to drive higher levels of group performance.     

Relationship between Intellectual Capital and Knowledge Management: An Empirical Investigation

Two important streams of the literature have examined intellectual capital (IC) and knowledge management (KM). Surprisingly, they have developed in parallel, without any empirical research on the relationship between them. This article empirically examines how IC and KM affect each other, and also investigates their consequences, viewing three intermediate consequences (dynamic capabilities, efficiency, and innovativeness) to mediate their effects on firm performance. In addition, this article examines the effects of the organization's culture on IC and KM. To address these issues, a comprehensive model is developed and tested using a combination of survey and secondary data of 533 companies in Taiwan. The results support the theoretical model. Major findings include the following: IC affects KM and dynamic capabilities; KM facilitates innovation but not dynamic capabilities or IC; a learning culture facilitates IC and innovation but not KM; firm performance depends on efficiency and innovation, but not directly on dynamic capabilities; and efficiency does not depend on any of the other constructs in the study. The article's implications for research and practice are examined.     

Sustaining the Benefits of a Quality Initiative through Cooperative Values: A Longitudinal Study

Although research has shown that organizational cultural values influence the success of quality initiatives, how and when cultural values are influential is unclear. This longitudinal study asserts that quality management should be viewed from a dynamic perspective to better understand the role of cooperative cultural values in a quality initiative. We use a multilevel model of quality management, and develop time‐oriented hypotheses using a sociotechnical systems perspective to examine the role of cooperative values. Our analysis uses longitudinal data from over 30 U.S. federal government agencies, collected during an enterprise‐wide quality initiative. We find that, over time, the influence of organization‐level quality practices diminishes, but the influence of cooperative values increases; workgroup‐level quality practices remain consistently important. Our findings reveal the unexplored influences of cooperative values to sustain the benefits of quality management.     

Organizational Silence and Whistle‐Blowing on IT Projects: An Integrated Model*

An individual's reluctance to report bad news about a troubled information technology (IT) project has been suggested as an important contributor to project failure and has been linked to IT project escalation as well. To date, information systems researchers have drawn from the mum effect and whistle‐blowing literature to gain a better understanding of the factors that influence bad news reporting. More recent theoretical work in the area of organizational silence offers a promising new conceptual lens, but remains empirically untested. In this research note, we integrate key elements of Morrison and Milliken's (2000) model of organizational silence, which has never been empirically tested, with the basic whistle‐blowing model adapted from Dozier and Miceli (1985) . Using a role‐playing experiment, we investigate how organizational structures/policies, managerial practices, and degree of demographic dissimilarity between employees and top managers create a climate of silence and how this climate, in turn, affects an individual's willingness to report. Our results show that all three types of factors contribute to a climate of silence, exerting both direct and indirect influence on willingness to report, as hypothesized. The implications of these findings and directions for future research are discussed.     

Formal Infrastructure and Ethical Decision Making: An Empirical Investigation and Implications for Supply Management

Building on Rest's (1986) conceptual model of ethical decision making, we derive and empirically test a model that links an organization's formal ethical infrastructure to individuals’ moral awareness of ethical situations, moral judgment, and moral intention. We contribute to the literature by shedding light on the importance of a multifaceted formal ethical infrastructure—consisting of formal communication, recurrent communication, formal surveillance, and formal sanctions—as a crucial antecedent of moral awareness. In so doing, we discern how these four elements of a formal ethical infrastructure combine to collectively influence moral awareness based on a second‐order factor structure using structural equation modeling. We test our model based on survey data from 805 respondents with significant work experience across three separate ethical scenarios. Our results across the three scenarios provide overall support for our model. We found that a second‐order factor structure for the formal ethical infrastructure explains the variance among the four infrastructure elements and that a multifaceted formal ethical infrastructure significantly increases moral awareness. Our results further suggest a strong positive effect of moral awareness on moral judgment, which in turn was found to have a positive impact on moral intention. These results were substantiated when taking several individual and contextual control variables into account, such as gender, age, religiosity, work satisfaction, and a de facto ethical climate. Implications for theory, practice, and supply management are discussed.     

Systems Collaboration and Strategic Collaboration: Their Impacts on Supply Chain Responsiveness and Market Performance*

Recognizing the importance of interfirm collaboration and recent advancement of information technology (IT) to enhance joint decision making between firms, this study conceptualizes systems collaboration and strategic collaboration as two essential types of interfirm collaboration. The study then simultaneously examines the multiple roles of systems collaboration and strategic collaboration, and how they directly and indirectly influence a firm's supply chain responsiveness and market performance. Hypotheses are tested on survey data collected from 184 firms. Results suggest that the sequential relationships among IT competency, interfirm collaboration, and supply chain responsiveness have significant market performance implications.     

Supply Chain Strategy,Product Characteristics,and Performance Impact: Evidence from Chinese Manufacturers*

Supply chain management has become one of the most popular approaches to enhance the global competitiveness of business corporations today. Firms must have clear strategic thinking in order to effectively organize such complicated activities, resources, communications, and processes. An emerging body of literature offers a framework that identifies three kinds of supply chain strategies: lean strategy, agile strategy, and lean/agile strategy based on in‐depth case studies. Extant research also suggests that supply chain strategies must be matched with product characteristics in order for firms to achieve better performance. This article investigates supply chain strategies and empirically tests the supply chain strategy model that posits lean, agile, and lean/agile approaches using data collected from 604 manufacturing firms in China. Cluster analyses of the data indicate that Chinese firms are adopting a variation of lean, agile, and lean/agile supply chain strategies identified in the western literature. However, the data reveal that some firms have a traditional strategy that does not emphasize either lean or agile principles. These firms perform worse than firms that have a strategy focused on lean, agile, or lean/agile supply chain. The strategies are examined with respect to product characteristics and financial and operational performance. The article makes significant contributions to the supply chain management literature by examining the supply chain strategies used by Chinese firms. In addition, this work empirically tests the applicability of supply chain strategy models that have not been rigorously tested empirically or in the fast‐growing Chinese economy.     

The Evolution of Culture and Institutions: Evidence From the Kuba Kingdom

We use variation in historical state centralization to examine the long‐term impact of institutions on cultural norms. The Kuba Kingdom, established in Central Africa in the early 17th century by King Shyaam, had more developed state institutions than the other independent villages and chieftaincies in the region. It had an unwritten constitution, separation of political powers, a judicial system with courts and juries, a police force, a military, taxation, and significant public goods provision. Comparing individuals from the Kuba Kingdom to those from just outside the Kingdom, we find that centralized formal institutions are associated with weaker norms of rule following and a greater propensity to cheat for material gain. This finding is consistent with recent models where endogenous investments to inculcate values in children decline when there is an increase in the effectiveness of formal institutions that enforce socially desirable behavior. Consistent with such a mechanism, we find that Kuba parents believe it is less important to teach children values related to rule‐following behaviors.     

Supply Chain Sourcing in Remanufacturing Operations: An Empirical Investigation of Remake Versus Buy

Despite recent attention to closed‐loop supply chains and remanufacturing, there is scant information about what drives the re‐make versus buy decision for original equipment manufacturers (OEMs) engaging in remanufacturing. Based on the extant remanufacturing literature and transaction cost economics, we formulated hypotheses related to the drivers of in‐house versus contracted remanufacturing operations. The hypotheses were investigated via quantitative and qualitative data, thus offering a rich test of the formulated relationships. Consistent with the theory, the quantitative results showed that intellectual property, operational assets, and remanufacturing frequency are significant drivers of the re‐make versus buy decision. However, counter to the theory, the quantitative results did not support the significance of brand reputation, technological uncertainty, condition uncertainty, product complexity, and volume uncertainty. The qualitative results were used to enrich these findings by providing theoretical extensions and pragmatic insights of the remake versus buy decision in remanufacturing.     

Organizational Integration for Product Development: The Effects on Glitches,On‐Time Execution of Engineering Change Orders,and Market Success

Deviations from requirements during the product development process can be considered as glitches. Fixing glitches, or problems, during the product development process consumes valuable resources, which may adversely affect product development time and hamper the firm's goal to pursue a first‐mover advantage. It is posited that an integrated organizational response can diminish incidences of glitches and improve the ability of the firm to respond to engineering changes, subsequently leading to improved market success. This organizational response frequently includes heavyweight product development managers who are seen as essential catalysts for internal integration. Though internal integration is vital, it is equally important to integrate with customers and suppliers alike because such network partners can provide access to information, knowledge, and unique and complementary resources that are otherwise unavailable to the firm. Findings, which are based on a sample of 191 product development projects in the automotive industry, suggest that some integration routines have a positive impact on product development outcomes and market success, while other routines can in fact hamper the collective effort.     

Why Total Quality Management Programs Do Not Persist: The Role of Management Quality and Implications for Leading a TQM Transformation*

Top‐down total quality management (TQM) programs often fail to create deep and sustained change in organizations. They become a fad soon replaced by another fad. Failure to institutionalize TQM can be attributed to a gap between top management's rhetoric about their intentions for TQM and the reality of implementation in various subunits of the organization. The gap varies from subunit to subunit due to the quality of management in each. By quality of management is meant the capacity of senior team to (1) develop commitment to the new TQM direction and behave and make decisions that are consistent with it, (2) develop the cross‐functional mechanisms, leadership skills, and team culture needed for TQM implementation, and (3) create a climate of open dialogues about progress in the TQM transformation that will enable learning and further change. The TQM transformations will persist only if top management requires and ultimately institutionalizes an honest organizational‐wide conversation that surfaces valid data about the quality of management in each subunit of the firm and leads to changes in management quality or replacement of managers.     

The Differential and Contingent Impact of Concurrency on New Product Development Project Performance: A Holistic Examination*

This article comprehensively examines how the four facets of new product development (NPD) concurrency, consisting of process and product concurrency groupings, influence NPD project performance under the five contextual conditions of (i) location of product in family stream, (ii) project size, (iii) stage in the product life cycle, (iv) innovativeness of the product, and (v) predictability of market demand. Using data from a large sample of NPD projects in multiple industries, there is support for this hypothesized four‐faceted structure of concurrency, consisting of process and product concurrency groupings, thereby contributing new knowledge to the concurrency literature. All four facets of concurrency display a contingent impact on NPD project performance, even though individual effects vary according to the specific contextual variable under consideration. In particular, the process concurrency facet of dynamic iterative routines was universally effective across all five contextual variables, while the product concurrency facet of cross‐functional coordination was effective in significantly influencing at least one NPD project measure. This article also reports similar, but less strong, contingency patterns, with respect to the process concurrency facet of the implementation of downstream coordination and the product concurrency facet of the use of computer‐based integrated design tools. Theoretical and practical implications of our results are also offered.     

The Role of Contracts on Quality and Returns to Quality in Offshore Software Development Outsourcing

In this study, we examine how the different incentive structures inherent in two primary contract types—time and materials (T&M) and fixed price (FP)—influence the quality provided by the vendor in the software development outsourcing industry. We argue that the incentive structure of FP contracts motivates a vendor to be more efficient in the software development process, which results in higher quality as compared to projects executed under a T&M contract. We thus argue that vendors consistently staff FP projects with better trained personnel because they face the most risk on these contracts, resulting in better outcomes on these projects. We extend our analysis to propose that providing higher quality is associated with higher profit margins for the vendor only for FP contracts. We develop and test these hypotheses on data collected from 100 software projects completed by a leading Indian offshore vendor. The results provide strong support for our fundamental thesis that the drivers of and returns to quality vary by contract type. We discuss the implications of our research for both researchers and practitioners.     

Toward a Theory of Whistleblowing Intentions: A Benefit‐to‐Cost Differential Perspective*

In order to rescue information technology (IT) projects when they go awry, it is critical to understand the factors that affect bad news reporting. Whistleblowing theory holds promise in this regard and a number of salient factors that may influence whistleblowing intentions have been identified. However, an integrative theory that explains how they influence whistleblowing intentions has been conspicuously absent. In this research, we introduce and test a middle‐range theory of whistleblowing that can explain how and why a variety of factors may influence an individual's whistleblowing intentions. Drawing on the social information processing perspective, we propose that individuals holistically weigh the perceived “benefit‐to‐cost differential” and that this mediates the relationship between whistleblowing factors and whistleblowing intentions. Tests using data collected from 159 experienced IT project managers largely support our theoretical perspective, in which the central explanatory variable (benefit‐to‐cost differential) significantly mediates a majority of the proposed relationships. Implications of these findings for research and practice are discussed.     

Effect of Quality Management Systems and Total Quality Management on Productivity Before and After: Empirical Evidence from the Indian Auto Component Industry

We study the linkages between firm‐level quality initiatives such as quality management systems (QMS) and total quality management (TQM) and output productivity in the Indian auto component industry. We use externally validated quality certification and quality awards as proxies for QMS and TQM, respectively, as it is difficult to directly measure the QMS and TQM efforts of firms. We use an unbalanced panel of 220 firms and a balanced panel of 73 firms from the Indian auto component industry over the period 1993–2006 to study these links. Both parametric as well as non‐parametric approaches are used, as appropriate, to measure the rate of change in productivity and the impact of quality initiatives on productivity change during this period. We determine the proportion of productivity resulting from technical change and relative efficiency change, thus providing insights into the structure of productivity improvements. We find that TQM efforts resulted in a high rate of productivity change (11%) in the award‐winning firms after the award. On the other hand, pre‐certification productivity change due to QMS was 5% and post‐certification change was 3.6%. In the periods prior to certification, productivity change was driven mainly by technical change; whereas the source of productivity change after certification is mixed. However, prior to awards, productivity change was driven mainly by relative efficiency change, whereas post‐award productivity change was due to technical change. The results suggest that management focus on attaining certification did generate conceptual learning (linked to technical change) during the period leading to certification, but these effects were not significant after certification. The results also suggest that the TQM programs generated significant productivity gains in the long run, although setting the associated systems in place did not result in significant productivity change prior to winning awards. Thus, the study provides direct but nuanced evidence linking quality certification as well as the adoption of TQM programs to the associated conceptual and operational learning processes and their impact on the change in productivity.     

The Influence of Cost and Quality Priorities on the Propensity to Outsource Production*

Outsourcing of production has escalated over the past decade due to unprecedented competition and worldwide access to low‐cost labor markets. This article examines how cost and quality priorities—two key attributes of manufacturing strategy—influence a manufacturer's propensity to outsource. By doing so, we bridge the existing gap between research on manufacturing strategy and firm boundaries. We develop a theory‐based model that links a manufacturer's cost and quality priorities to its plans to outsource production. Our empirical analyses, based on survey data obtained from 867 manufacturing business units, control for firm‐specific factors previously shown to impact outsourcing, including asset specificity, uncertainty, and current capabilities in cost and quality. We found that the competitive priority placed on cost played an integral role in sourcing decisions, while, surprisingly, conformance quality priorities did not. The cost result is consistent with our expectations and observations in practice. The significant effect of cost priority on outsourcing shows that any theory of firm boundaries that fails to consider competitive priorities is incomplete. The finding regarding quality, which was counter to our expectations, may partially explain why there is an emergence of so many nonconforming products associated with outsourcing. Taken together, our results provide theoretical insights for future research into how manufacturing managers can improve their decision making on outsourcing production.     

Customizing Quality Management Practices: A Conceptual and Measurement Framework

Quality management (QM) has often been promoted as a universal remedy, where organizations adopt these practices to enhance performance. However, implementation of QM has led to mixed results with some high‐profile failures. Some suggest that customizing QM practices to fit the organization's situational context can help avoid implementation failure and improve performance. However, research has not fully investigated how organizations should go about customizing quality practices. This article addresses this question by conceptualizing two fundamental yet different aspects of QM practices that have different learning objectives: quality exploitation (QEI) and quality exploration (QER). Drawing on experts and empirical data, we develop a reliable and valid set of measures for QEI and QER. Furthermore, the analysis shows the performance differences in the two sets of QM practices across different contextual settings. Specifically, the empirical results show that the benefits of different QM orientations depend on the level of competition and rate of product change. This research challenges prior conceptualizations of QM, and suggests a practical framework to guide decision makers in customizing QM practices.     

The Effect of Perceived Novelty on the Adoption of Information Technology Innovations: A Risk/Reward Perspective

A fundamental characteristic of any innovation is its novelty, the newness or freshness of the innovation in the eyes of the adopter. Past research has often considered novelty to be inherent to an information technology (IT) innovation, yet it is also likely that perceptions of novelty differ widely across individuals. Nevertheless, the role that the novelty of an IT innovation plays in adoption is not well understood. The primary goal of this research effort is to frame the perceived novelty of an IT innovation as a salient affective belief in the nomological network related to adoption. Further, we examine how perceived novelty influences the way individuals reconcile their perceptions of risk versus reward when considering the adoption of an IT innovation. Two empirical studies with 424 and 138 participants, respectively, examine the effect of perceived novelty on IT innovations from a risk/reward perspective. Results indicate that perceived novelty is a salient affective belief that plays a significant role in the adoption of IT innovations. Implications for both theory and organizational decision making are examined.     

Multichannels Strategy Implementation: The Role of Channel Alignment Capabilities*

A firm's distribution channels represent a key portfolio of resources that can be leveraged for competitive advantage. One approach to this portfolio that has become increasingly important in recent years is multichannel distribution (MCD). While this strategy has important benefits in terms of market coverage and firm performance, the use of multiple channels seriously affects downstream channel roles such as service delivery, as the financial rewards to channel members and the services they offer are separated. A channel member who offers poor or no service can free‐ride on the services offered to the same customer from a different channel. We draw on agency theory to explain these negative consequences. Additionally, the resource‐based view of the firm along with capabilities theory provides two key means of alleviating these consequences: channel tracking capabilities and reward alignment capabilities. The study, conducted in an industry facing serious MCD issues (the outdoor sporting goods industry), used key informant data matched to secondary data. Our results show that managers can reap the performance rewards of MCD strategies while minimizing its negative consequences. In particular, monitoring practices such as frequent site visits and phone contact with customers develop the firm's channel tracking capabilities, allowing managers to better monitor downstream activities. This becomes particularly important as the complexity from having multiple channels increases. Likewise, reward alignment capabilities such as retail price maintenance agreements and cooperative advertising enable the manager to minimize conflict among channel participants by ensuring sufficient profitability for all channel members.