Applications and Limitations of Transaction Cost Theory in Outsourcing of Information Technology

For a long time,as a theoretical foundation of outsourcing,the transaction cost theory is applied in decision,relation,con-tract,risk and performance of information technology outsourcing widely.The inherent limitations of transaction cost theory,however,have emerged increasingly with the rapid change of enterprise operation strategy and competitive environment.Its limitations are that it is hard to explain the real enterprise decision behavior with transaction cost theory with the expansion of information technology out-sourcing practice,the guidance of transaction cost theory is limited in power and behavior,and there exist many defects applying multi-ple theories to study transaction.