article

On Buyer Selection of Service Providers in Online Outsourcing Platforms for IT Services

Authors:

Paul A. PavlouAuthors Info & Claims

Information Systems Research, Volume 28, Issue 3

Pages 547 - 562

https://doi.org/10.1287/isre.2017.0709

Published: 01 September 2017 Publication History

Abstract

The Internet has presumably created a level playing field that allows any service provider across the globe to compete for contracts on online outsourcing platforms for information technology IT services. In this paper, we empirically examine a how country language, time zone, cultural differences and the country's IT development affect buyers' selection of service providers in online outsourcing platforms; and b how the reputation of service providers moderates the proposed effects of country differences and the country's IT development. We integrated a unique data set formed by a sample of 11,541 software development projects from an online outsourcing platform matched with archival sources on the language, time zone, culture, and IT development of countries. Since price is typically endogenous in any supply demand system, we used the exogenous variation of the normalized exchange rate of the currency among countries, as a "cost-shifter" type instrumental variable IV for econometric identification. Our panel data analyses results both with and without IV show that buyers are negatively affected by country differences in terms of language, time zone, and culture, and prefer service providers from countries with higher IT development. Notably, the reputation of service providers attenuates the negative effects of language and cultural but not time zone differences, while it substitutes the positive effect of the country's IT development. We discuss the study's theoretical and managerial implications for understanding the global dynamics of online outsourcing platforms and better designing these platforms.

The online appendix is available at <ext-link ext-link-type="uri" href="https://doi.org/10.1287/isre.2017.0709">https://doi.org/10.1287/isre.2017.0709</ext-link>.

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Zhao XXue LSong PKarahanna E(2024)Direct Communication and Two-Sided Matching Quality on a Digital PlatformInformation Systems Research10.1287/isre.2023.123535:2(629-641)Online publication date: 1-Jun-2024
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cover image Information Systems Research

Information Systems Research Volume 28, Issue 3

September 2017

233 pages

ISSN:1526-5536

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INFORMS

Linthicum, MD, United States

Publication History

Published: 01 September 2017

Accepted: 19 December 2016

Received: 17 June 2015

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https://dl.acm.org/doi/10.1287/isre.2023.1235
Kokkodis MRansbotham S(2023)Learning to Successfully Hire in Online Labor MarketsManagement Science10.1287/mnsc.2022.442669:3(1597-1614)Online publication date: 1-Mar-2023
https://dl.acm.org/doi/10.1287/mnsc.2022.4426
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