Effects of outsourced service providers’ experiences on perceived service quality : A signaling theory framework

Purpose The purpose of this paper is to propose a framework to examine experiences of an information technology/information systems (IS) outsourcing service supplier as a signal of perceived service quality and to consider the moderating effects of information asymmetries and signal credibility. Design/methodology/approach Drawing on signaling theory, the paper integrates past experiences of an outsourcing service supplier, information asymmetries, signal credibility, perceived service quality, and purchase intention into a model. Questionnaires were collected in Taiwan, and partial least-squares technique was employed to test the model. Findings The results indicate that past experiences of an IS outsourcing supplier affect perceived service quality, which subsequently influences positively the intention to purchase IS outsourcing services. In addition, signal credibility moderates the relationship between the provider’s past experiences and perceived service quality, though information asymmetries do not have significant effect on the hypothesized moderating relationship. Originality/value This research enriches the extant literatures in signaling theory by demonstrating the few-mentioned IS outsourced suppliers’ experiences as a quality signal as well as in outsourcing contexts with signaling perspectives. The empirical findings validate the importance of dissemination and investment of past experiences for IS provider companies and give a cue of utilizing providers’ experiences to alleviate uncertainty when assessing IS service quality and purchasing outsourcing services for client companies.