The role of governance effectiveness in explaining IT outsourcing performance

Yong Jin Kim; Jong Man Lee; Chulmo Koo; Kichan Nam

doi:10.1016/j.ijinfomgt.2013.07.003

The role of governance effectiveness in explaining IT outsourcing performance

Yong Jin Kim
, Jong Man Lee
, Chulmo Koo
, Kichan Nam

Research output: Contribution to journal › Article › peer-review

36 Citations (Scopus)

Abstract

Recent studies on IT outsourcing have examined the effect of contract specification and relationship strength on IT outsourcing performance in a separate manner. Previous studies, however, ignored the importance of the governance effectiveness that bonds contractual control and relationship strength together to deliver expected outcomes in IT outsourcing exchange. In this paper, we propose a model of IT outsourcing management where governance effectiveness mediates the effect of both contractual control and relationship strength on IT outsourcing performance. We collected data from 143 client companies of IT outsourcing and analyzed it using the PLS method. Our findings show that both contract specification and relationship strength significantly influence governance effectiveness, although contract specification carries the more effect on governance effectiveness than relationship strength does. The governance effectiveness in turn mediates the effect of contract specification and relationship strength on three sub-dimensions of outsourcing performance: cost efficiency, performance improvement, and overall satisfaction. The results and implications are further discussed.

Original language	English
Pages (from-to)	850-860
Number of pages	11
Journal	International Journal of Information Management
Volume	33
Issue number	5
DOIs	https://doi.org/10.1016/j.ijinfomgt.2013.07.003
Publication status	Published - 2013

Bibliographical note

Funding Information:
This research was partially supported by World Class University program funded by the Ministry of Education, Science, and Technology through the National Research Foundation of Korea ( R31-20002 ) and by the Sogang University Research Grant of 2010 ( 201010040 ).

Keywords

Contract specification
Governance effectiveness
IT outsourcing
Outsourcing performance
Relationship strength

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10.1016/j.ijinfomgt.2013.07.003

Cite this

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title = "The role of governance effectiveness in explaining IT outsourcing performance",

abstract = "Recent studies on IT outsourcing have examined the effect of contract specification and relationship strength on IT outsourcing performance in a separate manner. Previous studies, however, ignored the importance of the governance effectiveness that bonds contractual control and relationship strength together to deliver expected outcomes in IT outsourcing exchange. In this paper, we propose a model of IT outsourcing management where governance effectiveness mediates the effect of both contractual control and relationship strength on IT outsourcing performance. We collected data from 143 client companies of IT outsourcing and analyzed it using the PLS method. Our findings show that both contract specification and relationship strength significantly influence governance effectiveness, although contract specification carries the more effect on governance effectiveness than relationship strength does. The governance effectiveness in turn mediates the effect of contract specification and relationship strength on three sub-dimensions of outsourcing performance: cost efficiency, performance improvement, and overall satisfaction. The results and implications are further discussed.",

keywords = "Contract specification, Governance effectiveness, IT outsourcing, Outsourcing performance, Relationship strength",

author = "Kim, \{Yong Jin\} and Lee, \{Jong Man\} and Chulmo Koo and Kichan Nam",

note = "Funding Information: This research was partially supported by World Class University program funded by the Ministry of Education, Science, and Technology through the National Research Foundation of Korea ( R31-20002 ) and by the Sogang University Research Grant of 2010 ( 201010040 ). ",

year = "2013",

doi = "10.1016/j.ijinfomgt.2013.07.003",

language = "English",

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T1 - The role of governance effectiveness in explaining IT outsourcing performance

AU - Kim, Yong Jin

AU - Lee, Jong Man

AU - Koo, Chulmo

AU - Nam, Kichan

N1 - Funding Information: This research was partially supported by World Class University program funded by the Ministry of Education, Science, and Technology through the National Research Foundation of Korea ( R31-20002 ) and by the Sogang University Research Grant of 2010 ( 201010040 ).

PY - 2013

Y1 - 2013

N2 - Recent studies on IT outsourcing have examined the effect of contract specification and relationship strength on IT outsourcing performance in a separate manner. Previous studies, however, ignored the importance of the governance effectiveness that bonds contractual control and relationship strength together to deliver expected outcomes in IT outsourcing exchange. In this paper, we propose a model of IT outsourcing management where governance effectiveness mediates the effect of both contractual control and relationship strength on IT outsourcing performance. We collected data from 143 client companies of IT outsourcing and analyzed it using the PLS method. Our findings show that both contract specification and relationship strength significantly influence governance effectiveness, although contract specification carries the more effect on governance effectiveness than relationship strength does. The governance effectiveness in turn mediates the effect of contract specification and relationship strength on three sub-dimensions of outsourcing performance: cost efficiency, performance improvement, and overall satisfaction. The results and implications are further discussed.

AB - Recent studies on IT outsourcing have examined the effect of contract specification and relationship strength on IT outsourcing performance in a separate manner. Previous studies, however, ignored the importance of the governance effectiveness that bonds contractual control and relationship strength together to deliver expected outcomes in IT outsourcing exchange. In this paper, we propose a model of IT outsourcing management where governance effectiveness mediates the effect of both contractual control and relationship strength on IT outsourcing performance. We collected data from 143 client companies of IT outsourcing and analyzed it using the PLS method. Our findings show that both contract specification and relationship strength significantly influence governance effectiveness, although contract specification carries the more effect on governance effectiveness than relationship strength does. The governance effectiveness in turn mediates the effect of contract specification and relationship strength on three sub-dimensions of outsourcing performance: cost efficiency, performance improvement, and overall satisfaction. The results and implications are further discussed.

KW - Contract specification

KW - Governance effectiveness

KW - IT outsourcing

KW - Outsourcing performance

KW - Relationship strength

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DO - 10.1016/j.ijinfomgt.2013.07.003

M3 - Article

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SN - 0268-4012

VL - 33

SP - 850

EP - 860

JO - International Journal of Information Management

JF - International Journal of Information Management

IS - 5

ER -

The role of governance effectiveness in explaining IT outsourcing performance

Abstract

Bibliographical note

Keywords

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