Hybrid relational-contractual governance for business process outsourcing

Arun Rai, Mark Keil, Robert Hornyak, Kim Wüllenweber

Research output: Contribution to journalArticle

52 Citations (Scopus)

Abstract

We examined 335 business process outsourcing (BPO) ventures to understand the effect of contractual and relational governance factors on BPO satisfaction from the client's perspective. While both contractual and relational factors explain significant variance in BPO satisfaction, relational factors dominate. By examining interactions between key contractual and relational mechanisms, we found that elements of the two governance approaches operate as substitutes with respect to BPO satisfaction. Specifically, the relational mechanism, trust, was found to substitute for contractually specified activity expectations, goal expectations, and contractual flexibility. Similarly, the relational mechanism, information exchange, was found to substitute for contractually specified activity expectations and goal expectations. Finally, the relational mechanism, conflict resolution, was found to substitute for contractually specified goal expectations. Our results can be applied to more effectively realize controls in outsourcing contexts and to design governance systems that integrate contractual and relational governance mechanisms based on the characteristics of client-vendor relationships.

Original languageEnglish (US)
Pages (from-to)213-256
Number of pages44
JournalJournal of Management Information Systems
Volume29
Issue number2
DOIs
StatePublished - Oct 1 2012
Externally publishedYes

Fingerprint

Outsourcing
Industry
Governance
Business process outsourcing
Substitute
Factors

Keywords

  • Business process outsourcing
  • Controls
  • Formal contract
  • Hybrid governance
  • Relational governance
  • Services

ASJC Scopus subject areas

  • Management Information Systems
  • Information Systems and Management
  • Management Science and Operations Research
  • Computer Science Applications

Cite this

Hybrid relational-contractual governance for business process outsourcing. / Rai, Arun; Keil, Mark; Hornyak, Robert; Wüllenweber, Kim.

In: Journal of Management Information Systems, Vol. 29, No. 2, 01.10.2012, p. 213-256.

Research output: Contribution to journalArticle

Rai, Arun ; Keil, Mark ; Hornyak, Robert ; Wüllenweber, Kim. / Hybrid relational-contractual governance for business process outsourcing. In: Journal of Management Information Systems. 2012 ; Vol. 29, No. 2. pp. 213-256.
@article{dc91b36f2a6f4e7cb35d4415e99120a6,
title = "Hybrid relational-contractual governance for business process outsourcing",
abstract = "We examined 335 business process outsourcing (BPO) ventures to understand the effect of contractual and relational governance factors on BPO satisfaction from the client's perspective. While both contractual and relational factors explain significant variance in BPO satisfaction, relational factors dominate. By examining interactions between key contractual and relational mechanisms, we found that elements of the two governance approaches operate as substitutes with respect to BPO satisfaction. Specifically, the relational mechanism, trust, was found to substitute for contractually specified activity expectations, goal expectations, and contractual flexibility. Similarly, the relational mechanism, information exchange, was found to substitute for contractually specified activity expectations and goal expectations. Finally, the relational mechanism, conflict resolution, was found to substitute for contractually specified goal expectations. Our results can be applied to more effectively realize controls in outsourcing contexts and to design governance systems that integrate contractual and relational governance mechanisms based on the characteristics of client-vendor relationships.",
keywords = "Business process outsourcing, Controls, Formal contract, Hybrid governance, Relational governance, Services",
author = "Arun Rai and Mark Keil and Robert Hornyak and Kim W{\"u}llenweber",
year = "2012",
month = "10",
day = "1",
doi = "10.2753/MIS0742-1222290208",
language = "English (US)",
volume = "29",
pages = "213--256",
journal = "Journal of Management Information Systems",
issn = "0742-1222",
publisher = "M.E. Sharpe Inc.",
number = "2",

}

TY - JOUR

T1 - Hybrid relational-contractual governance for business process outsourcing

AU - Rai, Arun

AU - Keil, Mark

AU - Hornyak, Robert

AU - Wüllenweber, Kim

PY - 2012/10/1

Y1 - 2012/10/1

N2 - We examined 335 business process outsourcing (BPO) ventures to understand the effect of contractual and relational governance factors on BPO satisfaction from the client's perspective. While both contractual and relational factors explain significant variance in BPO satisfaction, relational factors dominate. By examining interactions between key contractual and relational mechanisms, we found that elements of the two governance approaches operate as substitutes with respect to BPO satisfaction. Specifically, the relational mechanism, trust, was found to substitute for contractually specified activity expectations, goal expectations, and contractual flexibility. Similarly, the relational mechanism, information exchange, was found to substitute for contractually specified activity expectations and goal expectations. Finally, the relational mechanism, conflict resolution, was found to substitute for contractually specified goal expectations. Our results can be applied to more effectively realize controls in outsourcing contexts and to design governance systems that integrate contractual and relational governance mechanisms based on the characteristics of client-vendor relationships.

AB - We examined 335 business process outsourcing (BPO) ventures to understand the effect of contractual and relational governance factors on BPO satisfaction from the client's perspective. While both contractual and relational factors explain significant variance in BPO satisfaction, relational factors dominate. By examining interactions between key contractual and relational mechanisms, we found that elements of the two governance approaches operate as substitutes with respect to BPO satisfaction. Specifically, the relational mechanism, trust, was found to substitute for contractually specified activity expectations, goal expectations, and contractual flexibility. Similarly, the relational mechanism, information exchange, was found to substitute for contractually specified activity expectations and goal expectations. Finally, the relational mechanism, conflict resolution, was found to substitute for contractually specified goal expectations. Our results can be applied to more effectively realize controls in outsourcing contexts and to design governance systems that integrate contractual and relational governance mechanisms based on the characteristics of client-vendor relationships.

KW - Business process outsourcing

KW - Controls

KW - Formal contract

KW - Hybrid governance

KW - Relational governance

KW - Services

UR - http://www.scopus.com/inward/record.url?scp=84870587457&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=84870587457&partnerID=8YFLogxK

U2 - 10.2753/MIS0742-1222290208

DO - 10.2753/MIS0742-1222290208

M3 - Article

VL - 29

SP - 213

EP - 256

JO - Journal of Management Information Systems

JF - Journal of Management Information Systems

SN - 0742-1222

IS - 2

ER -