E-commerce and e-procurement: an outsourcing perspective

The make or buy dilemma has been largely analyzed in the field of Information Systems. The main reason for this type of literature thriving so much is that the Information Systems function was one of the first enterprise areas to be externalized. If traditionally only few activities, distant from the core business of the enterprises, have been externalized with the sole objective of gaining efficiency, in the late Nineties externalization of real company functions has started to be considered again, in some instances concerning activities that have always been considered core business. The role played by the management of organizational interdependencies was stressed and the fact that outsourcing was perceived according to solutions of organizational engineering was highlighted, steering enterprises towards new organizational design criteria. In fact, make or buy decisions require more and more that organizational variables be structured by processes and not by functions, precisely to ease the management of organizational interdependencies and make externalization decisions more transparent and objectively measurable. The research question of this paper aims at understanding how much can a particular form of electronic commerce, such as e-procurement, be categorized as a special form of outsourcing, intending this phenomenon as a hybrid organizational form, halfway between hierarchy and market. In order to categorize the outsourcing phenomenon from a theoretical standpoint, the Transaction Cost Theory (TCT) has been used, while the research method consists of a case study. In this paper the attention will be focused on a particular process only, i.e., procurement, in relation to the activities involved in the externalization process. The paper will analyze an outsourcing case applied to the entire macro-process of procurement. The conclusions will highlight the evolving trends in this research field, which appears to be affected by substantial changes and to be increasingly more volatile and influenced by multiple factors that are not always easily recognizable and measurable. The purpose of this paper in fact is to give a contribution to the formalization of an application subject, namely, externalization of procurement, largely diffused in practice although scarcely developed from a theoretical standpoint.