Which Control Strategies and Configurations Affect Performance? Evidence from Large Scale Outsourcing Arrangements

We study the effects of management controls and organizational configurations on the performance of large and complex outsourcing initiatives which span multiple years, cost millions of dollars and involve multiple functions. Using survey data from Chief Information Officers we seek to validate several hypotheses concerning the positive effects of controls on outsourcing configurations and their joint effects on outsourcing performance. We observe that targeted behavior controls, and clan controls are positively related to improved performance after controlling for the effects of conventional time and cost controls. In addition, we show that the increased use of selected behavior controls affects the flexibility of outsourcing arrangements and thus improves outsourcing performance. Another configurational feature- multi-sourcing- directly affects performance. The paper adds to our overall understanding of the influence of informal management controls on outsourcing configurability and their ultimate effect on outsourcing performance. These findings apply to complex control situations including large scale outsourcing arrangements and multi-party new product development