Social Capital in Knowledge Based Business Process Outsourcing

Organizations are pursuing the outsourcing of business processes (BPO) to offshore locations. However, current research has shown that a knowledge-sharing gap between the client and vendor organizations leads to less than expected benefits. This research applies social capital theory to study the antecedents necessary for the creation of social and intellectual capital in the BPO relationship and their downstream impact on knowledge sharing behaviors. The benefits of the creation of social and intellectual capital translate to improved knowledge sharing and a better BPO outcome as measured using vulnerability, coordination and production costs from coordination theory. A case study of a knowledge management system (KMS) in BPO is used to support the propositions. Preliminary results indicate that investments toward client-vendor relationships in BPO can be worthwhile. They create social and intellectual capital, which improves knowledge sharing behaviors that lead to better utilization of knowledge management systems, lower coordination costs and an improved BPO outcome.