Determinants of Application Service Provider (ASP) Adoption as an Innovation

The trend toward external procurement of software and services has led to the emergence of application service providers (ASPs). While prior research has investigated the use of ASPs as a form of outsourcing, this study considers ASP from multiple perspectives, both as a genre of outsourcing and as an IT innovation. Employing Tornatzky and Fleischer's (1990) theoretical framework, this study identifies the most important determinants of ASP adoption. A model that explains ASP diffusion and infusion is specified and tested using PLS. Some of the most important factors of ASP adoption identified in the study include: top management orientation, integration capability, internal IS expertise and competitive pressure. Other factors such as relationship management, service quality, relative advantage and cost were found to be less important. With the phenomenon of ASP at a very early stage, this study provides an opportunity to understand the immediate and practical implications of its adoption.