An Empirical Analysis of the Contractual and Information Structures of Business Process Outsourcing Relationships

Deepa Mani (), Anitesh Barua () and Andrew B. Whinston ()
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Deepa Mani: Indian School of Business, Hyderabad 500032, India
Anitesh Barua: McCombs School of Business, The University of Texas at Austin, Austin, Texas 78712
Andrew B. Whinston: McCombs School of Business, The University of Texas at Austin, Austin, Texas 78712

Information Systems Research, 2012, vol. 23, issue 3-part-1, 618-634

Abstract: The emergence of information-intensive business process outsourcing (BPO) relationships calls for the study of exchange performance beyond traditional considerations of the contractual structure that facilitates cooperative intent to include the information structure that facilitates the mutual exchange of information to enact cooperative intent and coordinate actions between the user firm and the service provider. Yet, there has been little analysis of the drivers and performance effects of the information structure of BPO relationships, including its linkages to the underlying contractual structure. This study integrates perspectives in neo-institutional economics and information processing to develop and test the theoretical argument that the extent of use and performance effects of the information structure of the BPO relationship are greater in time and materials BPO contracts than in fixed-price BPO contracts. Survey data on 134 BPO relationships provide empirical support for our hypotheses. The synergistic impact of incentives and information on BPO performance emphasizes that their joint assessment is necessary to enhance the explanatory power of extant theories of organization. This result also has implications for achieving maximum benefits from complex BPO arrangements that are more likely to be characterized by time and material contracts.

Keywords: BPO; outsourcing; governance; contractual structure; information structure; coordination; information processing; performance (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (10)

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