Effective outsourcing governance: A configurational approach

This paper uses a configurational approach to identify dominant outsourcing governance approaches used by practitioners. It also aims to examine whether certain combination(s) of client firm capabilities, supplier firm capabilities, contractual governance elements, and relational governance elements could lead to better outsourcing performance. Four dominant governance approaches emerge based on the data analysis results of 175 client informants, namely, optimal, relationship building, interdependent, and loose control. The results also indicate that three measures of outsourcing performance (financial return, service quality, and innovation) vary differently across these four governance approaches. In addition, this study suggests that more than one governance approach can lead to same outsourcing outcome. This study provides insights to both IS researchers and outsourcing practitioners regarding effective outsourcing governance. Future research could focus on both client and provider's perspectives and the dynamic nature of outsourcing governance.