The Role of Social Capital in Determining BPO Outcome

Organizations are pursuing the outsourcing of business processes (BPO) to offshore locations. This research applies social capital theory to study the benefits of social capital resources on knowledge sharing process capabilities in an offshore BPO relationship. The research framework is based on the resource based view of a firm where knowledge processes are the capabilities, social capital is the resource and the BPO costs are the outcome. The study posits that the benefits of creating social capital translate to improved knowledge process capabilities, which result in a better BPO outcome as measured using vulnerability, coordination and production costs from coordination theory. Moreover, the social capital resource is also postulated to have a moderating effect in the relationship between knowledge process capabilities and the BPO outcome.