Asset Transfer in IT Outsourcing: Divesting Commodities or Inviting Investment?

Information technology outsourcing is often accompanied by the risky practice of transferring clients’ production assets to vendors. It is unclear why outsourcing similar services is, at times, accompanied by asset transfer while at other times is not. Theoretical explanations in the Resource Based View and Property Rights Theory have tended to separately focus on either the nature of the outsourced service or the ownership of the asset. I argue that independently they offer only partial explanation of the common phenomena and consequently propose an integrative framework. Based on two well documented case studies, I offer an illustration to the merits of the framework.