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Renegotiation of Software Outsourcing Contracts

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dc.contributor.author Huang, He
dc.contributor.author Hu, Minhui
dc.contributor.author Kauffman, Robert
dc.contributor.author Xu, Hongyan
dc.date.accessioned 2019-01-03T00:51:08Z
dc.date.available 2019-01-03T00:51:08Z
dc.date.issued 2019-01-08
dc.identifier.isbn 978-0-9981331-2-6
dc.identifier.uri http://hdl.handle.net/10125/60095
dc.description.abstract Fixed-price and time-and-materials contracts are commonly-used contract forms by clients in software outsourcing. The two parties, client and provider, usually renegotiate the testing time after system development occurs. This research investigates the impacts of such renegotiation on the client’s contract choice. Our analysis shows that under both contract forms, renegotiation can incentivize the provider’s effort, and this effect becomes more influential when the provider has higher bargaining power. Compared with a fixed-price contract, a time-and-materials contract can stimulate the provider’s effort based on the terms for monitoring and reimbursement. The results suggest that when the provider has high bargaining power, the client will prefer a fixed-price contract. But when the provider has low bargaining power and the cost of monitoring is low, the client will prefer a time-and-materials contract. When the provider has low bargaining power and the cost of monitoring is high though, the client will prefer a fixed-price contract.
dc.format.extent 7 pages
dc.language.iso eng
dc.relation.ispartof Proceedings of the 52nd Hawaii International Conference on System Sciences
dc.rights Attribution-NonCommercial-NoDerivatives 4.0 International
dc.rights.uri https://creativecommons.org/licenses/by-nc-nd/4.0/
dc.subject Strategy, Information, Technology, Economics, and Strategy (SITES)
dc.subject Organizational Systems and Technology
dc.subject Software outsourcing, contract renegotiation, bargaining power, economic modeling
dc.title Renegotiation of Software Outsourcing Contracts
dc.type Conference Paper
dc.type.dcmi Text
dc.identifier.doi 10.24251/HICSS.2019.792
Appears in Collections: Strategy, Information, Technology, Economics, and Strategy (SITES)


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