Toward a deeper understanding of information system outsourcing governance in transition economies

Abstract

Managing an information system (IS) outsourcing relationship is regarded as a critical success factor in commercial practice. However, there is limited academic research on how an IS outsourcing relationship is governed to ensure its success and maintain productive relationships. In particular, it is challenging for companies to achieve such feat in China due to the institutional instability of its transition economies. In this context, we draw upon institutional theory to develop a model examining relationships among governance mechanisms, IS outsourcing success, and relational continuity expectation. Results of a survey from 105 state-owned and 82 non-state-owned outsourcing projects show that the positive relationship between contractual governance and outsourcing success is stronger in state-owned firms than in non-state-owned ones. On the other hand, non-state-owned firms have a stronger relationship between relational governance and outsourcing success, and between outsourcing success and relational continuity.