IT Outsourcing Success: A Psychological Contract Perspective

Christine Koh (), Soon Ang () and Detmar W. Straub ()
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Christine Koh: Nanyang Business School S3-1A-14/15, Nanyang Technological University, Nanyang Avenue 639798, Singapore
Soon Ang: Nanyang Business School S3-1A-14/15, Nanyang Technological University, Nanyang Avenue 639798, Singapore
Detmar W. Straub: Computer Information Systems Department, J. Mack Robinson College of Business, Georgia State University, Atlanta, Georgia 30302-4015

Information Systems Research, 2004, vol. 15, issue 4, 356-373

Abstract: Information technology (IT) outsourcing success requires careful management of customer-supplier relationships. However, there are few published studies on the ongoing relationships, and most of these adopt a customer perspective, de-emphasizing suppliers. In this study, we look at both customer and supplier perspectives, by means of the psychological contract of customer and supplier project managers. We apply the concept of psychological contract to perceived mutual obligations, and to how such fulfillment of obligations can predict success. Our research questions are (1) What are the critical customer-supplier obligations in an IT outsourcing relationship? and (2) What is the impact of fulfilling these obligations on success?We use a sequential, qualitative-quantitative approach to develop and test our model. In the qualitative study, we probe the nature of customer-supplier obligations using in-depth interviews. Content analysis of interview transcripts show that both customers and suppliers identify six obligations that are critical to success. Customers perceive supplier obligations to be accurate project scoping, clear authority structures, taking charge, effective human capital management, effective knowledge transfer, and effective interorganizational teams. Suppliers perceive customer obligations as clear specifications, prompt payment, close project monitoring, dedicated project staffing, knowledge sharing, and project ownership. In the second quantitative study, we assess the impact of fulfilling these obligations on success through a field study of 370 managers. Results show that fulfilled obligations predict success over and above the effects of contract type, duration, and size.

Keywords: IT outsourcing success; postcontractual issues; contracts; psychological contracting theory; outsourcing relationship management; mixed methods approach; hierarchical regression (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (34)

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