Exploring the Role of Initial Trust, Initial Distrust, and Trust through Knowledge Sharing in IT Outsourcing: From a Service Receiver's Perspective

According to the International Data Corporation, the worldwide outsourcing market size is estimated to rise from $100 billion in 1998 to $152 billion by 2005, with an annual growth rate of 12.2% (Dibbern, Goles, Hirschheim, & Jayatilaka, 2004). Despite a new wave of billion dollars contracts, hardly anyone can attest a successful return in outsourcing investments with certainty. One of the difficulties for this uncertainty is due to the complexity inherently built in an outsourcing relationship. How can this relationship be untangled when it is based on overwhelmingly complex contract? Yet, even with a very detailed contract, it is not possible to spell out every rule and condition. As observed, the interactions between the clients and their service providers often go beyond rules, agreements, and exceptions. They also rest on intangible factors that could not be easily captured in the contract such as trust and interdependency (cf. Goles, 2001). Hence, rather than relying on a rigid contract, there is an interest in seeking and building flexibility in an outsourcing relationship where trust plays a significant role. According to the social exchange literature, trust is one of the most desired qualities in any close relationship (Mayer & Davis, 1995; Moorman, Deshpande, & Zaltman, 1993). Accordingly, trust plays a critical role in the development of long-term relationship and in facilitating exchange relationship. Without trust, organizations will cooperate with their service providers only under a system of formal and legal rules.