Antecedents of agency problems in service outsourcing

Ananya Bhattacharya and Prakash J. Singh

International Journal of Production Research, 2019, vol. 57, issue 13, 4194-4210

Abstract: As outsourcing of services has grown in popularity, agency problems such as adverse selection and moral hazard have become more prevalent, leading to increased contracting costs. In this paper, we focus on how adverse selection and performance ambiguity arise in service outsourcing arrangements. We used agency theory as a theoretical lens to propose a mediated model where two antecedents, information asymmetry and goals compatibility, directly affect performance ambiguity, and indirectly through adverse selection. This model was tested empirically with dyadic data on 50 matched pair service outsourcing arrangements between organisations in Australia. Results show that information asymmetry impacts performance ambiguity through adverse selection, whereas goals compatibility affects performance ambiguity directly, without influencing adverse selection. These results suggest that the two agency problems are differentially affected by the antecedents of service outsourcing. The theoretical and practical contributions of this study are a better understanding of how different agency problems arise and how they can be controlled in service outsourcing in particular and in service production context more generally.

Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://hdl.handle.net/10.1080/00207543.2018.1506179 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:tprsxx:v:57:y:2019:i:13:p:4194-4210

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/TPRS20

DOI: 10.1080/00207543.2018.1506179

Access Statistics for this article

International Journal of Production Research is currently edited by Professor A. Dolgui

More articles in International Journal of Production Research from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().