Accounting executives and IT outsourcing recommendations: an experimental study of the effect of CIO skills and institutional isomorphism

Although substantial effort has been devoted to understanding how cost issues drive Information Technology outsourcing (ITO), several researchers have proposed that this narrow focus ignores the role of more subtle factors. This paper addresses this concern by investigating internal and external influences on accounting executives’ recommendations to outsource the IT infrastructure. Using resource-based and institutional theories, we hypothesize that when the chief information officer's (CIO's) skills are strong, accounting executives will more likely advise against outsourcing. But when the skills are weak, accountants are more likely to mimic the outsourcing actions of industry peers. Our findings support this expectation. These results should interest IS, accounting, and general management scholars. Strategic IT choices are a collegial decision which include contributions from multiple members of the top management team. Senior accounting executives are routinely involved in such evaluations, providing initial projections and monitoring the consequent progress. In addition, recent US regulations have made accounting executives personally responsible for the effectiveness of internal controls, including those over the IT infrastructure. The accounting executives’ recommendations on ITO in this context often becomes decisive, and factors behind this recommendation should be fully explored.