Pergamon PII: European Management Journal Vol. 19, No. 2, pp. 195–202, 2001 2001 Elsevier Science Ltd. All rights reserved Printed in Great Britain S0263-2373(00)00094-3 0263-2373/01 $20.00 IT Outsourcing: Evidence from France and Germany JÉRÔME BARTHELEMY, Groupe ESC, Nantes Atlantique DOMINIQUE GEYER, Groupe ESC, Nantes Atlantique In this article, we study IT outsourcing in two European countries. A survey carried out on 160 large French and German firms highlights the main differences between French and German IT outsourcing practices. First, German firms tend to outsource less critical activities than French ones. Second, IT outsourcing joint-decisions (i.e. top and IT management) are more frequent in Germany than in France. Third, IT outsourcing operations more frequently entail personnel transfers and layoffs in France than in Germany. Fourth, the proportion of quasi-outsourcing operations is larger in Germany than in France. The differences between French and German IT outsourcing practices are explained through cultural and economic differences. French and German findings are also compared to existing empirical evidence in the United States and the United Kingdom. 2001 Elsevier Science Ltd. All rights reserved Keywords: Outsourcing, France, Germany, Information Technology The outsourcing of Information Technology (IT) does not appear to be a new phenomenon. Time sharing, which involves purchasing computer time, was very popular in the 1960s and 1970s. From the mid-1980s on however, a new type of IT outsourcing started blossoming. According to Cheon et al. (1995), five main differences stand out between this new type of IT outsourcing and more traditional IT outsourcing: ❖ a greater range and depth of services is outsourced; ❖ people and equipment are transferred to the supplier; ❖ suppliers often accept profit and loss responsibility; ❖ the nature of the relationship with suppliers evolves towards partnerships; European Management Journal Vol 19 No 2 April 2001 ❖ larger companies are outsourcing (i.e. not only small and medium sized companies that do not possess their own IT infrastructure). Though this new type of IT outsourcing started developing in the mid-1980s, it really took off after the very much-heralded contract between Kodak and IBM in 1989. According to Loh and Venkatraman (1992), this landmark deal legitimized the practice of IT outsourcing among US Fortune 500 firms. The socalled ‘Kodak effect’ led to a quick increase in the adoption rate of IT outsourcing. The literature on IT outsourcing generally revolves around two main topics: the IT outsourcing decision and the management of IT outsourcing operations. Case studies of firms that have been successful with IT outsourcing such as Continental Bank (Huber, 1993), British Petroleum (Cross, 1995) and Eastman Kodak (McFarlan and Nolan, 1995) have often been used to develop ‘best practices’ regarding both IT outsourcing decision and management. Theoretical frameworks such as Transaction Cost Economics (Williamson, 1975, 1985) have also been frequently used to devise IT outsourcing ‘best practices’. For instance, Aubert et al. (1996) have turned the Transaction Cost Economics framework upside down, suggesting that activities can be successfully outsourced only if they: (1) do not rely on specific assets, (2) are not subject to a high degree of external uncertainty, and (3) are those that the firm relies on infrequently. In that case, the costs of outsourcing (i.e. direct purchase price and costs associated with managing the outside supplier) are lower than the costs of carrying out the activity internally (i.e. costs of internal procurement and costs associated with managing the internal IT department). As Transaction Cost Economics is mainly concerned with transaction and production cost efficiency 195 IT OUTSOURCING (Williamson, 1991b), the management literature has sought to integrate performance elements in outsourcing frameworks. For instance, Quinn and Hilmer (1994) propose a framework that encompasses insights from both Transaction Cost Economics and the Resource-Based View of the firm (Wernerfelt, 1984; Barney, 1991; Grant, 1991). According to Quinn and Hilmer (1994), companies should ‘outsource everything except those special activities in which they could achieve a unique competitive edge’ but also take transaction costs into account as ‘most supplier markets are imperfect (and) outsourcing entails unique transaction costs — searching, contracting, controlling, and recontracting — that at times may exceed the transaction costs of having the activity directly under management’s in-house control’ (Quinn and Hilmer, 1994, pp. 47–48). Contrary to the bulk of the work on IT outsourcing, our aim is not to develop ‘best practices’. Our goal is to study the differences between IT outsourcing practices in these two European countries: France and Germany. So far, IT outsourcing in France and Germany has received little empirical attention (e.g. Heinzl, 1993). Most empirical studies on IT outsourcing have focused on either the United States (e.g. Lacity and Hirschheim, 1993) or the United Kingdom (e.g. Willcocks et al., 1995) or both countries (e.g. Lacity et al., 1996). At first glance, IT outsourcing appears to be a universal practice. This apparently universal character should not disguise the fact that IT outsourcing may be influenced by national contexts. making. Regarding the management of IT outsourcing operations, we focus on three important topics: (1) personnel transfers and layoffs; (2) IT outsourcing vs. quasi-outsourcing and (3) concerns with IT outsourcing. Our model is summarized in Figure 1. IT Outsourcing Decision Attitude Towards IT Outsourcing A casual reading of the French press (e.g. Le Monde Informatique, 01-Informatique) and German press (e.g. Computerwoche) suggests than German firms are more reluctant to outsource IT than their French counterparts. However, this evidence is only anecdotal. No large-scale empirical study has tackled this issue so far. Empirical studies on IT outsourcing generally distinguish between firms that outsource their IT and firms that do not. In our opinion, this ‘IT outsourcing vs. no IT outsourcing’ dichotomy does not account for the full range of attitudes towards IT outsourcing. Basically, we suggest that firms should be split into four groups: ❖ firms that have not considered IT outsourcing; Our findings are based on a large-scale survey in France and Germany. A questionnaire was mailed to the 500 largest firms in both countries. 160 questionnaires were returned (i.e. 12.2 per cent of the French and 19.8 per cent of the German mailings). The breakdown of the sample by country and by industry is summarized in Table 1. Overall, the structure of the French and German samples is very similar. In this article, we investigate the two main dimensions of IT outsourcing: the IT outsourcing decision and the management of IT outsourcing operations. Regarding the IT outsourcing decision, we focus on the following topics: (1) attitude towards IT outsourcing; (2) type of outsourced IT activities; (3) IT outsourcing motivations and (4) IT outsourcing decision- Table 1 Distribution of Firms across Sectors Sector Energy and extraction Raw materials and chemicals Manufacturing industry Trade/Food/Catering Banking/Finance/Insurance Others Total number of firms 196 Figure 1 Model Used in the Study French sample 5 9 13 14 15 5 61 8% 16% 21% 23% 24% 8% 100% German sample 13 14 17 21 24 10 99 13% 14% 17% 22% 25% 9% 100% Both samples 18 23 30 35 39 15 160 11% 15% 19% 22% 24% 9% 100% European Management Journal Vol 19 No 2 April 2001 IT OUTSOURCING ❖ firms that are examining the question of IT outsourcing but have not yet finalized their decision; ❖ firms that have made a negative decision regarding IT outsourcing; ❖ firms that have made a positive decision regarding IT outsourcing. The classical ‘outsourcing vs. no outsourcing’ dichotomy collapses the first three categories in a single one (i.e. ‘no outsourcing’). Thus, information is lost on two important dimensions: ❖ the percentage of firms that have not yet finalized their IT outsourcing decision gives valuable insight on the maturity of the IT outsourcing phenomenon; ❖ the percentage of firms that have made a negative decision regarding IT outsourcing gives information on the reluctance to IT outsourcing. Simply stating that a firm does not currently outsource is insufficient to determine whether it is actually reluctant to outsource. The attitudes of French and German firms towards IT outsourcing are summarized in Figure 2. Our data show that 47.5 per cent of French firms and 43.4 per cent of German firms have outsourced at least part of their IT. Hence, IT outsourcing has become a central concern for a significant proportion of French and German firms. The figures for French and German firms are comparable. As expected, both countries are lagging behind the United States. For instance, a survey carried out by Sobol and Apte (1995) has shown that 77.1 per cent of their sample1 had outsourced at least one IT function. As regards firms that have not yet made their IT outsourcing decision, there are a few differences between France and Germany. While the percentage of firms that have not considered IT outsourcing at all is only slightly superior in France (19.7 per cent) than in Germany (16.2 per cent), the percentage of firms that are currently considering IT outsourcing is significantly superior in Germany (15.2 per cent) than in France (6.6 per cent). Hence, these results suggest that German firms are lagging a little behind their French counterparts. However, they are bridging the gap by examining the feasibility of IT outsourcing more intensively. Finally, it should also be noted that about a quarter of the firms seems to be totally opposed to IT outsourcing (26.2 per cent of French firms and 25.3 per cent of German firms). A further analysis of the reasons for rejecting IT outsourcing was conducted. The analysis clearly showed that satisfaction with the current performance of internal services was the main reason for rejecting IT outsourcing. This motivation was quoted by 75 per cent of French firms and 52 per cent of German firms as an important reason for rejecting IT outsourcing. Hence, our findings corroborate those of Teng et al. (1995). In an empirical study of 188 US firms, these authors showed that IT outsourcing is more likely to happen when the performance of the internal IT department falls short of expectations. Finding 1: IT outsourcing is a widespread practice in both France and Germany. While German firms lag a little behind French firms, they are currently bridging the gap. Type of Outsourced IT Activities As we have suggested in the preceding section, the dichotomy ‘IT outsourcing vs. no IT outsourcing’ does not encompass every possible attitude of firms towards IT outsourcing. The second drawback of this dichotomy is that it does not consider the heterogeneity of the IT outsourcing phenomenon. Hence, it is important to distinguish between different types of IT outsourcing operations. Based on Grover et al. (1996), we distinguish between the outsourcing of: ❖ the entire IT function; ❖ applications development (i.e. software tailored to the specific needs of the firm); ❖ networks (i.e. systems that make it possible to exchange files, access the same programs, share applications at the corporate level …); ❖ data centers; ❖ microcomputers. The differences between France and Germany are summarized Figure 3. Figure 2 Attitudes of French Towards IT Outsourcing and German European Management Journal Vol 19 No 2 April 2001 Firms The first important finding is that the entire IT function is frequently outsourced in both countries. In the subsample of firms that outsource at least a part of their IT, 44.8 per cent of French firms and 32.6 per 197 IT OUTSOURCING trary, French firms outsource more specific parts of IT, which is in line with the current North American IT outsourcing trend. For instance, a paper on IT outsourcing in Canada reported that 72 per cent of firms outsource their data centers, 76 per cent of firms outsource their networks and 48 per cent of firms outsource their applications developments (Saint-Amant and Lequin, 1998). Finding 2: While French firms outsource specific IT activities, German firms predominantly outsource standardized IT activities. This may be attributed to the ‘organizational shamelessness’ of German managers towards the current IT outsourcing trend. IT Outsourcing Motivations Figure 3 Type of Outsourced IT Activities in France and in Germany cent of German firms outsource the entire IT function. However, the French figure is significantly higher than the German one. As regards the outsourcing of other IT activities, there are also major differences between France and Germany: ❖ two activities are more frequently outsourced in France than in Germany: applications development (31 per cent of French cases vs. 20.9 per cent of German cases) and microcomputers (17.2 per cent of French cases vs. 4.7 per cent of German cases); ❖ two activities are more frequently outsourced in Germany than in France: networks (25.6 per cent of German cases vs. 6.9 per cent of French cases) and data centers (44.2 per cent of German cases vs. 10.3 per cent of French cases). The differences between France and Germany are quite significant and need to be explained. Recently, Grover et al. (1996) argued that some IT functions had become increasingly standardized. According to these authors, the most commoditized IT functions were respectively data centers and network management. On the other hand, applications development and the entire IT function remained far less commoditized. Hence, our results suggest that German firms outsource less standardized activities than their French counterparts. This significant discrepancy may be attributed to ‘organizational shamelessness’. Lawrence (1980) termed ‘organizational shamelessness’ the unwillingness to conform to conventional wisdom on business practices just for the sake of doing so. According to this author, German managers have generally been less open to external influences than managers from other countries. In other words, German managers are only moderately concerned with management fads. Regarding IT outsourcing, our findings suggest that German firms are still reluctant to outsource specific parts of their IT, which they may consider as a mere fad. On the con198 Based on Sobol and Apte (1995), we distinguish between three main motivations to IT outsourcing: (1) economic motivations; (2) performance motivations and (3) control motivations: ❖ Economic Motivations. Through IT outsourcing, firms can access the economies of scale enjoyed by specialized IT suppliers. Economies of scale help reduce average costs by spreading fixed costs over more units of output and by receiving volume discounts inputs. Both human and technological resources are likely to be concerned by economies of scale. For instance, while the management of one mainframe requires four employees, the management of ten mainframes requires less than forty employees. Seven or eight employees is enough, which entails significant cost savings for large firms and specialized IT suppliers; ❖ Performance Motivations. Through outsourcing, firms can access the expertise of leading edge IT suppliers. Specialized IT suppliers are better performing and more technologically advanced than other firms because they focus their entire resources on IT. They also manage to attract the best IT employees, who prefer to work for a firm whose ‘core business’ is IT (Quinn and Hilmer, 1994); ❖ Control Motivations. Through outsourcing, firms can better control IT, which eventually results in lower costs. In the case of the Continental Bank for instance, outsourcing was a way to gain tighter control over legal services and IT (Huber, 1993). In order to study these three major motivations of IT outsourcing, we used five items in our questionnaire. As it is quite straightforward, the economic motivation was assessed with only one item: ‘cost reduction’. The performance motivation was measured with two items: ‘general expertise of IT suppliers’ and ‘technological expertise of IT suppliers’. Finally, the control motivation was measured with two items: ‘overall control’ and ‘cost control and awareness’. The results are summarized in Figure 4. European Management Journal Vol 19 No 2 April 2001 IT OUTSOURCING Hence, we focus on this particular type of IT outsourcing decision (see Figure 5). The decision to outsource the entire IT function appears to be more frequently made by the CEO than by the CIO. This finding is consistent in both France (50 vs. 41.7 per cent of all cases) and Germany (41.7 vs. 33.3 per cent of all cases). On the other hand, there is a large difference between the two countries as regards joint decisions. The number of joint decisions is actually far higher in Germany (i.e. 25 per cent) than in France (8.3 per cent). Figure 4 IT Outsourcing Motivations Two main findings emerge from the data: ❖ first, cost reduction appears to be the leading motivation for IT outsourcing in both countries. The French rating is 3.9 and the German one is 4.1, while no other motivation is superior to 3.1 in either country. Thus, the difference between the cost reduction motivation and all the other motivations is significant. Through IT outsourcing, French and German companies essentially expect to take advantage of the economies of scale enjoyed by outside IT suppliers. This finding is consistent with British and American results. For instance, Lacity et al. (1996) found that cost savings was quoted as the major incentive for IT outsourcing by 85 per cent of the managers they interviewed; ❖ second, there are few differences between French and German motivations for outsourcing all or part of the IT function. The only slight difference is that German firms seem to be more frequently motivated by control. While there is no significant difference on the ‘overall control’ item (with ratings of 2.7 in France and 2.9 in Germany), the ‘cost control and awareness’ item is significantly more important in Germany (rating of 3.1) than in France (rating of 2.5). This large difference between France and Germany stems from cultural discrepancies. The original system of co-management (Mitbestimmung) makes the German economy very different from that of other European countries. According to the German law of 1976 on co-management, a large part of the board of directors is composed of employee representatives2. The co-management system has substantial implications regarding the overall management of firms. One of them is that the relationships between employer and employees are more cooperative in Germany than in other European countries. Therefore, decisions that have a huge impact on IT are more likely to be made by both CEOs and CIOs in Germany. ‘Total IT outsourcing’ is clearly one of them. Finding 4: IT outsourcing operations are more frequently initiated by CEOs than CIOs in France and in Germany. Due to the co-management system, strategic decisions such as the outsourcing of the entire IT function also involve more jointdecisions in Germany than in France. Management of IT Outsourcing Operations Outsourcing and Personnel Transfers or Reductions One important characteristic of recent IT outsourcing operations is that they often entail a transfer of equip- Finding 3: The motivations for IT outsourcing are very similar in France and Germany. Cost reduction is the most significant motivation in both countries. IT Outsourcing and Decision-Making The last important topic regarding the IT outsourcing decision is that of the actual decision-maker. Basically, IT outsourcing decisions can be made by either the Chief Information Officer (CIO) or the Chief Executive Officer (CEO) or both. The outsourcing of the entire IT function is the most strategic decision. European Management Journal Vol 19 No 2 April 2001 Figure 5 Entire IT Function Outsourcing Decision 199 IT OUTSOURCING ment and personnel to the supplier. While a significant proportion of IT employees may be transferred, some others may even be laid off. Figure 6 shows the difference between France and Germany regarding personnel transfers and layoffs. Our data reveal an important gap between French and German firms. While 69 per cent of IT outsourcing operations entail personnel transfers and layoffs in France, the percentage is only 41.9 per cent in Germany. Once again, this large difference between French and German IT outsourcing operations can be explained through cultural factors. Outsourcing operations with personnel changes are likely to entail hostile reactions from IT employees. Due to the greater power of German trade unions, German employees can more effectively oppose such operations than French employees can. Among the OECD countries, France has the lowest unionization rate. There are a large number of unions in France but none of them is very powerful. On the other hand, there are a small number of powerful unions in Germany. For instance, the D.G.B. (Deutsche Gewerkschaftsbund) has an almost hegemonic position. Contrary to French unions, German ones can use their sheer strength to deter personnel transfers and layoffs following IT outsourcing operations. Finding 5: Due to the power of trade unions, IT outsourcing operations in Germany entail fewer personnel transfers and layoffs than in France. Outsourcing vs. Quasi-Outsourcing As regards the management of IT outsourcing operations, a further important distinction must be made between outsourcing and quasi-outsourcing. Outsourcing consists in transferring all or part of the IT function to an outside supplier. Quasi-outsourcing consists in setting up a subsidiary and transferring all or part of the IT function to this subsidiary. The Figure 6 Personnel Transfers and Layoffs 200 idea is to transform an internal IT department into an external entity that is empowered to behave like a vendor. Quasi-outsourcing also has one clear advantage over outsourcing: it enables a better control of the outsourced activities than through a simple contract. The results from our survey are summarized in Figure 7. Actually, there is a huge difference between France and Germany. The proportion of quasi-outsourcing operations is significantly larger in the latter country than in the former. While only 17.2 per cent of French firms use quasi-outsourcing, 46.5 per cent of their German counterparts resort to this technique. This finding can be explained through important cultural and economic differences. The German economy is characterized by the presence of industrial groups (i.e. Konzerns). Interlocking ownership in Konzerns creates a high degree of interconnectedness between most German firms (Pohl, 1992). This interconnectedness primarily rests on the tight bonds between German banks and manufacturers3. The presence of Konzerns in German helps explain an important difference between IT outsourcing practices in France and Germany. Konzerns often create their own subsidiary companies to which they outsource their IT (i.e. quasi-outsourcing). These subsidiaries can then propose their services to the firms belonging to the Konzern. These firms are easier to attract than ‘external’ customers (i.e. firms that do not belong to the Konzerns). Hence, such subsidiaries can be relatively successful even if they have no real competitive advantage compared to other IT suppliers. As a rule, the larger the Konzern, the more frequently subsidiaries are created in order to benefit from economies of scale. Finding 6: Due to the existence of Konzerns, the proportion of quasi-outsourcing operations is larger in Germany than in France. Figure 7 Quasi-outsourcing Operations in France and Germany European Management Journal Vol 19 No 2 April 2001 IT OUTSOURCING Concerns with IT Outsourcing We eventually focused on the problems that can arise when firms outsource their IT. As with the IT outsourcing motivations, we distinguished between three categories of concerns based on Sobol and Apte (1995). The two main disadvantages listed by Sobol and Apte (1995) were: (1) control issues; (2) cost and performance issues. Contrary to American and British studies, we believe that personnel issues are also likely to cause trouble in European IT outsourcing operations. Hence, we distinguish between three concerns: ❖ Control Concerns. Once firms have outsourced IT, they may be afraid to lose control over this activity. The contract plays a central role in controlling the IT supplier. A tight contract is necessary to avoid being too dependent on the supplier. However, no contract can provide the same control as hierarchy (Williamson, 1991a); ❖ Cost and Performance Concerns. An important concern with IT outsourcing is that it may not live up to expectations. For instance, costs may increase and quality may decrease. More and more reports show that phenomenal savings due to IT outsourcing simply do not materialize. For instance, Saunders et al. (1997) found that the average savings were a mere 15.4 per cent. Moreover, almost half of the surveyed firms could not provide an estimate of the cost savings; ❖ Internal Opposition Concerns. IT outsourcing is very likely to have a negative impact on the internal IT employees. As it often entails personnel transfers and layoffs, it may be opposed by IT employees either directly (i.e. strikes) or indirectly (i.e. lower employee productivity). It should also be remembered that outsourcing is generally perceived as betrayal by the internal IT employees; We used ten items in our questionnaire. Control concerns were operationalized using four items: ‘data leakage’, ‘know-how leakage’, ‘contract incompleteness’ and ‘dependency’. Cost and performance concerns were measured with three items: ‘cost’, ‘quality’ and ‘transition period’4. Internal opposition concerns were assessed with three items: ‘union opposition’, ‘personnel opposition’ and ‘plummeting personnel morale’. The empirical results are summarized in Figure 8. Our main finding is that both French and German firms are generally satisfied with IT outsourcing. The most significant single concern (i.e. ‘union opposition’ in Germany) is only quoted in 16.5 per cent of the cases. There are also a few differences between France and Germany. German firms are mainly concerned with internal opposition. For instance, the ‘union opposition’ item is significantly more important in Germany (i.e. 16.5 per cent) than in France (i.e. 3.5 per cent). This can be largely attributed to the power of trade unions in Germany (cf. 2.1). On the other hand, European Management Journal Vol 19 No 2 April 2001 Figure 8 IT Outsourcing Concerns French firms are more concerned with cost and performance issues. For instance, the transition period item is significantly more important in France (14 per cent) than in Germany (7 per cent). This may be attributed to the fact that French firms generally outsource less standardized activities (cf. 1.2). As regards control, concerns are shared in both countries. For instance, 14 per cent of firms in both countries are concerned with the dependency entailed by IT outsourcing. On the other hand, a large percentage of German firms (i.e. 14 vs. 7 per cent in France) are concerned with the issue that IT outsourcing contracts may be incomplete. Finding 7: Concerns with IT outsourcing are low in both countries. While French firms are more concerned with cost and performance issues, German ones are generally more concerned with internal opposition issues. Conclusion Despite an apparent homogeneity, there are a few significant differences between IT outsourcing in France and Germany. The most salient differences are the following. First, German firms tend to outsource less critical activities than French ones, which may be attributed to their ‘organizational shamelessness’. Second, IT outsourcing joint-decisions (i.e. top and IT management) are more frequent in Germany than in France, which may be attributed to the German system of co-management (i.e. Mitbestimmung). Third, IT outsourcing operations more frequently entail personnel transfers and layoffs in France than in Germany. This may essentially be attributed to the power of unions in Germany. Fourth, the proportion of quasioutsourcing operations is larger in Germany than in France. Once again, this reflects a difference between the German and French economic systems. German Konzerns often create their own subsidiaries, to which they outsource their IT. Apart from these differences, IT outsourcing practices are very similar in France and Germany. 201 IT OUTSOURCING Notes 1. The sample was comprised of 48 firms belonging to the most effective users of IT according to the 1991 and 1992 surveys of Computerworld. 2. In most sectors, employee representatives represent one third of the members of the board of directors. 3. On the other hand, the French banking structure is weaker and far more fragmented. It also works less closely with industry. 4. The time required by the supplier to take over the outsourced IT activity. References Aubert, B., Rivard, S. and Patry, M. (1996) A transaction cost approach to outsourcing behavior: some empirical evidence. Information and Management 30, 51–64. Barney, J. (1991) Firm resources and sustained competitive advantage. Journal of Management 17, 99–120. Cheon, M., Grover, V. and Teng, J. (1995) Theoretical perspectives on the outsourcing of information systems. Journal of Information Technology 10(4), 209–220. Cross, J. (1995) IT outsourcing: British Petroleum’s competitive approach. Harvard Business Review May–Jun, 94–102. Grant, R. (1991) The resource-based theory of competitive advantage: implications for strategy formulation. California Management Review 33(3), 114–135. Grover, V., Cheon, M. and Teng, J. (1996) The effect of service quality and partnership on the outsourcing of information systems functions. Journal of Management Information Systems 12(4), 89–116. Heinzl, A. (1993) Die Ausgliederung der betrieblichen Datenverarbeitung. Schäffer-Poeschel Verlag, Stuttgart. Huber, R. (1993) How Continental Bank outsourced its ‘crown jewels’. Harvard Business Review Jan–Feb, 121–129. Lacity, M. and Hirschheim, R. (1993) Information Systems Outsourcing. John Wiley and Sons, Chichester. Lacity, M., Willcocks, L. and Feeny, D. (1996) The value of selective IT outsourcing. Sloan Management Review Spring, 13–25. Lane, C. (1997) The governance of interfirm relationships in Britain and Germany. In Societal or Dominance Effects? eds R. Whitley and P.H. Kristensen. Oxford University Press, Oxford. Lawrence, P. (1980) Managers and Management in West Germany. Croom Helm, London. Loh, L. and Venkatraman, N. (1992) Diffusion of information technology outsourcing: influence sources and the Kodak effect. Information Systems Research 3(4), 334–358. McFarlan and Nolan, R. (1995) How to manage an IT outsourcing alliance. Sloan Management Review, Winter, 9– 22. Pohl, H. (1992) On the history of organizations and management in large German enterprises since the 19th century. In The Rise of Big Business, ed. B. Supple. Edward Elgar, Aldershot. Quinn, J. and Hilmer, F. (1994) Strategic outsourcing. Sloan Management Review Summer, 43–55. Saint-Amant, G. and Lequin, G. (1998) Les activités imparties et les raisons de l’impartition informatique au Canada: enquête auprès des dirigeants du service informatique de grandes entreprises canadiennes. Paper presented at the 7th Conference of the Association Internationale du Management Stratégique, Louvain la Neuve, Belgium. Saunders, C., Gebelt, M. and Hu, Q. (1997) Achieving success in information systems outsourcing. California Management Review 39(2), 63–79. Sobol, M. and Apte, U. (1995) Domestic and global outsourcing practices in America’s most effective users. Journal of Information Technology 10, 299–321. Teng, J., Cheon, M.J. and Grover, V. (1995) Decisions to outsource systems functions: testing a strategy-theoretic discrepancy model. Decision Science 26, 75–103. Wernerfelt, B. (1984) A resource-based view of the firm. Strategic Management Journal 5, 171–180. Willcocks, L., Fitzgerald, G. and Feeny, D. (1995) Outsourcing IT: the strategic implications. Long Range Planning 28(5), 59–70. Williamson, O.E. (1975) Market and Hierarchies: Analysis and Antitrust Implications. Free Press, New York. Williamson, O.E. (1985) The Economic Institutions of Capitalism. Free Press, New York. Williamson, O.E. (1991a) Comparative economic organization: the analysis of discrete structural alternatives. Administrative Science Quarterly 36, 269–296. Williamson, O.E. (1991b) Strategizing, economizing and economic organization. Strategic Management Journal 12, 75– 94. JÉRÔME BARTHELEMY, ESCNA Graduate School of Management, Route de la Jonelière, 44312 Nantes Cedex 3, France. DOMINIQUE GEYER, ESCNA Graduate School of Management, Route de la Jonelière, 44312 Nantes Cedex 3, France. Jérôme Barthelemy is Assistant Professor of Strategic Management at ESCNA Graduate School of Management. He holds a Ph.D. from HEC, Paris and has published several articles on outsourcing and contractual agreements. Dominique Geyer is Assistant Professor of Business Administration in the Accounting and Control area of ESCNA Graduate School of Management. He received his Ph.D. from the University of Lille. His research focuses on Information Technology outsourcing in France and Germany and Institutional Analysis. 202 European Management Journal Vol 19 No 2 April 2001