Supplier Capabilities and eSourcing Relationships: A Psychological Contract Perspective

Abstract

The forces of globalization have influenced organizations to extend the concept of IT outsourcing to IT-intensive business process outsourcing (eSourcing). Most of the research on managing outsourcing relationships has focused either on legal contracts or on strategic partnerships. Advocating a different viewpoint, researchers like Rousseau (1995) found that in reality everyday working of contractual relationships was governed by individual’s subjective interpretation and was fundamentally psychological in nature. The objective of this paper is to posit a relationship step model which projects a vital relationship management capability plus psychological contract perspective for eSourcing. It incorporates the stance of relational contract, interorganizational relationship and psychological contract theories. Using the qualitative research paradigm, the research model is preliminarily explored with case studies of two eSourcing suppliers. The exploratory results of this research indicate that relationship management capability of suppliers is an important factor shaping the outsourcing value proposition.