Outsourcing Success: Psychological Contract Perspective

One of the major issues in IT outsourcing is the management of the client-vendor relationship. Researchers have suggested the use of both formal processes such as contract negotiations and bidding and to informal processes such as relationship management to reduce vendor opportunistic behaviors. This paper explores psychological beliefs about mutual obligations in outsourcing relationships through the prism of psychological contract theory. Rooted in the expectation confirmation theory, we develop a theoretical model of the salient factors that contribute to psychological contract violation and how such violation may influence the continuance of IT outsourcing relationships. The potential of this model and its implications are also discussed.