Understanding commitment in business process outsourcing relationships

Based on cost savings and efficiency gains in past business process outsourcing (BPO) projects, firms increasingly consider outsourcing knowledge-intensive and strategically oriented business processes. However, the success of these strategic BPO projects entails strong commitment from both the client and the service provider to leverage interfirm resources and engage in close collaboration to improve the client's business processes. Despite the growing acceptance of BPO practices, how commitment is formed with respect to BP remains unclear. To address this knowledge gap, weemploy the relational view as our theoretical lens in explaining that the client's commitment is influenced by the relational value from outsourcing relationships. Relational values are characterized as knowledge-based capabilities, process-based capabilities, and governance. The proposed model and hypotheses are largely supported by the empirical data from 167 firms: the results show that commitment is positively affected by the service provider's task-knowledge coordination, process alignment, process flexibility, and the client's behavior control over the service provider. Finally, we discuss theoretical and practical implications. (C) 2014 Elsevier B.V. All rights reserved.