Transaction cost-based motives for multisourcing in information technology

Abstract

From its beginning in 1990s, multisourcing has given information technology companies an opportunity to gain a competitive advantage in a turbulent environment. The article aims to understand the motives for multisourcing from a transaction cost economics perspective, and tries to resolve the paradox between choosing a form of cooperation that lowers transaction costs (TC), and deciding for multisourcing, which, based on articles and described cases, increases TC by as many parties involved as there are. Multisourcing is a relatively new phenomenon, and few studies have embarked on a topic of why it is undertaken by firms, therefore case study is a relevant research method. The article suggests that multisourcing is not chosen by firms to lower TC, but companies need to act to reduce the costs.