The impacts of bridge transfer on service outsourcing: the social network perspective

Services outsourcing is a prevalent yet problematic phenomenon. On the one hand, more and more firms are outsourcing services function. On the other hand, we are faced with many services outsourcing failures. This research attempts to uncover some of the omitted causes of services outsourcing failure. It extends a conceptual paper that used social network theory to examine the shifting of the triadic relationship structures among the service buyer, service supplier and the buyer's customers at different stages of the services outsourcing arrangements and its performance implications. This study empirically examines these performance implications. Specifically, this research defines the concept of bridge transfer, which denotes the weakening and dissolution of operational ties between the service buyer firms' and their end customers and the appearing and strengthening of operational ties between the service supplier firms and the end customers. It also empirically derives a measurement scale for this new construct. Further, the effects of bridge transfer on supplier's appropriation behavior, buyer's cost of quality and end customers' quality perception are examined in the context of customer facing services and are contrasted with those entail little or no customer interactions. In addition, the moderating roles of buyer-supplier relationship on the effects of bridge transfer are also examined. An Internet-based survey was administered to firms affiliated with CAPS Research and the Institute of Supply Management as the primary data source (n=137). Principal Component Analyses were used to derive a composite score for each of the model construct. Then linear regressions were used to detect the effects of bridge transfer on services outsourcing outcomes and to detect the moderating role of buyer-supplier relationships on these effects. The results show that bridge transfer is positively correlated to suppliers' appropriate behavior and negatively correlated to end customer's quality perception in the context of customer facing services. The effects of bridge transfer are not found for services that entail little or no interactions with the end customers. Instead, buyer-supplier relationship is found to be a key influencing factor to services outsourcing outcomes in this context. This study helps to pinpoint some of the omitted causes of services outsourcing failures and shed light on how to manage services outsourcing for success.