Impacts of internal and interorganizational information systems on the outsourcing of manufacturing

Drawing on transaction cost economics, this paper looks at the relationship of IT use to the outsourcing of manufacturing using survey data from US manufacturers. We find that greater use of interorganizational systems (IOS) is associated with greater outsourcing, but we do not find any main effects between internal IT and outsourcing. A negative interaction effect is found between measures of internal IT and IOS, suggesting that the two may be substitutes rather than complements. This distinction between internal IT and IOS, and the relationship of the two, offers scholars a more nuanced understanding of the nature and impacts of IT. It provides managers insight into how different types of IT can support different sourcing options.