Abstract
Purpose - Research into post contract management control in inter-organizational relationships in general is immature and studies of transactional arrangements such as back-office BPO even more so. The global BPO market has grown from over $47 Billion in 2006 to over $75 Billion by 2011. However, satisfaction with such arrangements has been reported to be very low. Neither management control nor economic theories appear able to fully explain how control is realized between firms. This research provides a detailed qualitative analysis of post contract management control methods utilized in practice in a BPO context.Design / methodology / approach – an embedded multiple case study of four transactional BPO arrangements was employed to support generalizability. Data was collected from the USA, UK and India. Sources of evidence from both sides of the dyadic relationship were used to minimize problems of construct validity. A case study protocol was established to maximize case study reliability. Data analysis comprised within case and cross case analyses.
Findings – The research findings suggest that factors beyond the establishment of a legal promissory contract are required to achieve effective management control. The results suggest that performance monitoring and evaluation is a very important aspect of management control in a transactional BPO arrangement. The findings also suggest that contract flexibility is important. Despite the anticipation that coordination, relating to the amount of alignment between client and supplier in the pursuit of achieving agreed performance outcomes, would not have been important, the results appear to cast some doubt on such expectations. The results indicate that conflict between exchange partners is a common aspect of on-going interaction with a lack of coordination appearing to be the most significant factor. However, evidence was collected of integrative as well as distributive methods of conflict resolution. That said, evidence of informal trust-based patterns of control underpinned by mutual goodwill was not found. The findings did not suggest that as organizations work together over time that close personal ties necessarily get formed. The results revealed very little evidence of Cultural Affinity between the exchange parties. However, evidence of cultural adaptation was found with regard to supplier recruitment, training and communications. The findings indicated different levels of commitment being applied by clients and suppliers and important differences in cooperation and communication behaviour.
Practical implications - This research proposes that post contract management control of transactional BPO arrangements should not be as arm’s-length as the conventional wisdom has assumed. The findings suggest that: (1) clients and suppliers need to coordinate and communicate effectively to ensure that the supplier can achieve agreed service levels; (2) managers should not shirk from imposing hostage penalties whilst also engaging in joint problem solving; (3) suppliers need to adapt cultural norms to more closely fit those of their client.
Originality / value – a new theoretical model of contractual inter-organizational management control is presented along with a number of propositions for research testing. The model provides a potentially important first step in prescribing how to maximize the outcomes of a transactional outsourcing arrangement.
| Date of Award | Feb 2013 |
|---|---|
| Original language | English |
| Supervisor | Paul Humphreys (Supervisor) |
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