NDLI: An Incentive Model of IS Outsourcing Contract

Content Provider	IEEE Xplore Digital Library
Author	Jinmei Huai
Copyright Year	2007
Description	Author affiliation: Sch. of Econ. & Manage., East China Jiaotong Univ., Nanchang (Jinmei Huai)
Abstract	An approach to analyze incentive schemes and structuring IS outsourcing contracts for the mutual gain is presented in this paper. Outsourcing contract is critical to the management of the IS outsourcing relationship because improperly or incompletely written contracts can have significant negative implications for the firms. A linear principal-agent model based on EVA (economic value added) for constructing incentive contracts in IS outsourcing is developed. Incentive management literature relative to linear principal-agent model has focused on determining the proportion of agent's profit to principal's profit to receive maximum economic returns from agent's action. In fact, the validity of incentive is decided by the positive correlation between the variable of agent's performance and outsourcing output. Arguing the feasibility of using EVA to evaluate the outsourcing vendor's performance in IS outsourcing, a linear principal-agent model based on EVA is devised for improving IS outsourcing vendors' performance and the advantage and disadvantage of this model was discussed.
Starting Page	6588
Ending Page	6592
File Size	109709
Page Count	5
File Format	PDF
ISBN	9781424413119
DOI	10.1109/WICOM.2007.1617
Language	English
Publisher	Institute of Electrical and Electronics Engineers, Inc. (IEEE)
Publisher Date	2007-09-21
Publisher Place	China
Access Restriction	Subscribed
Rights Holder	Institute of Electrical and Electronics Engineers, Inc. (IEEE)
Subject Keyword	Measurement standards Forward contracts Outsourcing Random variables Distortion measurement Boring Equations Incentive schemes Information systems Testing
Content Type	Text
Resource Type	Article

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