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IT Outsourcing Success: A Psychological Contract Perspective

Author

Listed:
  • 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)

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.

Suggested Citation

  • Christine Koh & Soon Ang & Detmar W. Straub, 2004. "IT Outsourcing Success: A Psychological Contract Perspective," Information Systems Research, INFORMS, vol. 15(4), pages 356-373, December.
    • Handle: RePEc:inm:orisre:v:15:y:2004:i:4:p:356-373
    DOI: 10.1287/isre.1040.0035
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    References listed on IDEAS

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    1. Jackie Coyle‐Shapiro & Ian Kessler, 2000. "Consequences Of The Psychological Contract For The Employment Relationship: A Large Scale Survey," Journal of Management Studies, Wiley Blackwell, vol. 37(7), pages 903-930, November.
    2. Barthelemy, Jérôme & Geyer, Dominique, 2001. "IT outsourcing: : Evidence from France and Germany," European Management Journal, Elsevier, vol. 19(2), pages 195-202, April.
    3. Akbar Zaheer & Bill McEvily & Vincenzo Perrone, 1998. "Does Trust Matter? Exploring the Effects of Interorganizational and Interpersonal Trust on Performance," Organization Science, INFORMS, vol. 9(2), pages 141-159, April.
    4. Jae-Nam Lee & Shaila M. Miranda & Yong-Mi Kim, 2004. "IT Outsourcing Strategies: Universalistic, Contingency, and Configurational Explanations of Success," Information Systems Research, INFORMS, vol. 15(2), pages 110-131, June.
    5. Violet T. Ho & Soon Ang & Detmar Straub, 2003. "When Subordinates Become IT Contractors: Persistent Managerial Expectations in IT Outsourcing," Information Systems Research, INFORMS, vol. 14(1), pages 66-86, March.
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