Organizational Control, Incentive Contracts, and Knowledge Transfer in Offshore Business Process Outsourcing

Abstract

W e study the determinants of output quality in offshore business process outsourcing (BPO). Firms can exert control over output quality through incentives formally written into contracts and allow both clients and providers to manage the offshore agents creating a dual governance mechanism. We use a combination of two data sets, a cross sectional data set of 139 processes and a balanced panel data set comprising 21 processes with 36 observations per process, to investigate the impact of different factors on the quality of output of offshore BPO providers. Our findings point to the strong moderating effect of process codifiability on the dual governance mechanism. Process codifiability is not only associated with higher output quality, it also moderates the functioning of the dual governance mechanism and determines when the managerial efforts of the client and provider are substitutes and when they are complementary. We show that contractual incentives tied to quality are generally associated with a higher quality of output. Finally, we show that the use of processlevel inter-organizational information systems also has a positive impact on the output quality of offshore BPO providers.

Sourcing structures and the execution efficiency of information technology projects: A comparative evaluation using stochastic frontier analysis

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Managing inter-organizational knowledge sharing

“…Explicit knowledge is most easily protected by law. This results in transparency for both firms as to (1) which knowledge will (not) be shared, and (2) how the transfer process will be organized (Liu and Aron, 2014.). The former refers to the completeness of the contract and facilitates internal guidelines and task assignments to collect and prepare the knowledge for sharing (Leidner, 2010).…”

The impact of digital technology usage on economic growth in Africa

“…There is a well-documented contention that digitalisation creates economic growth ( Bukht and Heeks, 2017 ). Digitalisation is enabled through information and communication technology, which is defined by Kabongo and Okpara (2014, p. 315) as “any communication device or application, including radio, television, mobiles phones, computers, network hardware and software and satellite systems … and any associated applications.” From e-commerce to business process outsourcing, digital technology has transformed how firms operate globally ( Lacity et al, 2016 ; Liu and Aron, 2014 ). Furthermore, it has revolutionised how people communicate (e.g., social media) and how governments engage with citizens through e-government platforms ( Zhao et al, 2015 ).…”