Persistence Influence for IT Outsourcing: Small and Medium Firms Perspectives of Their Application Service Providers

Abstract

Given today's fierce competition among application service providers (ASP), one key question for any ASP is how to retain their customers' loyalty through partnership establishment and provision of quality of service. However, prior studies focused on the ongoing relationships between the ASP and clients are sparse. This study investigates the perspectives of small and medium firms for their information technology (IT) outsourcing, especially when they are seeking facilitation from the ASP. The study applies the psychological concepts of satisfaction and trust to assess a firm's loyalty state which can predict the persistence for IT outsourcing. The research questions are: (i) Do the key factors of IT outsourcing enhancement - partnership and quality of service - influence a firm's IT outsourcing cognition? (ii) Does a small or medium firm's IT outsourcing cognition - satisfaction and trust - have a positive relationship to its IT outsourcing continuance with an ASP? This study uses the partial least squares approach to develop and test a model that encapsulates these questions. A field study of 158 small and medium firms was conducted. Results show that the key factors of IT outsourcing enhancement and cognition are able to predict a firm's persistence of IT outsourcing.