Power Distance in Information Systems Offshoring Projects - A Control Theory Perspective

Controlling IS offshoring projects is a great challenge because of the inherent uncertainty of such projects. In such settings, informal controls are assumed to become increasingly effective. However, still little is known about the factors that influence the effectiveness of informal controls. We argue that the vendor manager’s power distance orientation—a key cultural construct that reflects beliefs about status, authority, and power in organizations—represents a missing antecedent of informal control effectiveness. Analyzing data from 57 client-vendor matched pairs, we found that high power distance on the part of the vendor manager negatively impacts project performance but at the same time positively moderates the relationship between selfcontrol and performance.