Applying Agency Theory in a Complicated Context: A Cynefin-Guided Framework for Cloud Contracting

A cloud contract can be an effective tool for managing uncertainty in cloud computing adoption. To make informed choices when selecting the right cloud contract type, it is crucial to consider the impact of uncertainty factors. However, there is a lack of comprehensive knowledge regarding how uncertainty influences cloud contract decisions. This study aims to address this knowledge gap, combining the Cynefin framework to sense, analyse, and respond to the context with agency theory to analyse the relationship between uncertainty and decision-making in cloud contract types.
This research explores four key uncertainty factors and their impact on cloud contract decisions. The quantitative research reveals that investments in information systems and the length of agency relationships positively affect outcome-based cloud contracts but negatively impact behaviour-based cloud contracts. In contrast, task programmability has the opposite effect, impacting these contract types differently. The influence of outcome measurability on cloud contracts appears to be insignificant.