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Client dependence: A boon or bane for vendor innovation? A competitive mediation framework in IT outsourcing

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  • Gopalakrishnan, Shanthi
  • Zhang, Haisu

Abstract

Information technology (IT) outsourcing has grown in volume and in importance since the 1990s. Clients and vendors are becoming more interdependent in a complex collaborative setting. Client dependence, however, happens to be a double-edged sword with respect to vendor performance. In this study, we build a competitive mediation model, which explores both the bright and the dark sides of client dependence for vendor innovation based on relationship marketing and resource dependence as our theoretical lenses. We further analyze the role of vendor size as a moderator. On the one hand, our results demonstrate that client dependence has a positive effect, mediated by relationship satisfaction, on vendor innovation. On the other hand, client dependence also has a direct negative effect on vendor innovation. Vendor size seems to play an interesting moderating role where it attenuates the direct negative effect of client dependence; but it does not affect the positive mediating effect of relationship satisfaction. This research highlights dual theoretical routes that expose opposing effects of client dependence on vendor innovation. The findings also provide practitioners with implications regarding how to maximize benefits and yet minimize the obstacles from dependency in a dyadic outsourcing relationship.

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  • Gopalakrishnan, Shanthi & Zhang, Haisu, 2019. "Client dependence: A boon or bane for vendor innovation? A competitive mediation framework in IT outsourcing," Journal of Business Research, Elsevier, vol. 103(C), pages 407-416.
    • Handle: RePEc:eee:jbrese:v:103:y:2019:i:c:p:407-416
    DOI: 10.1016/j.jbusres.2017.12.023
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    Cited by:

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    2. John Effah & Ibrahim Osman Adam, 2022. "Examining Client-Vendor Relationship in the Outsourcing of a Work Environment Virtualisation: An Activity Theory Perspective," Information Systems Frontiers, Springer, vol. 24(5), pages 1585-1599, October.
    3. Kyung Yun Hwang & Eul Hyun Sung & Temitayo Shenkoya, 2022. "The Mediating and Combined Effects of Trust and Satisfaction in the Relationship between Collaboration and the Performance of Innovation in Industry—Public Research Institute Partnerships," Sustainability, MDPI, vol. 14(4), pages 1-18, February.
    4. Marfri Gambal & Aleksandre Asatiani & Julia Kotlarsky, 2022. "Strategic Innovation Through Outsourcing: A Theoretical Review," Papers 2206.00982, arXiv.org.
    5. Tingxuan Han & Luxi Zhang & Xinshu Zhao & Ke Deng, 2023. "Total-effect Test May Erroneously Reject So-called "Full" or "Complete" Mediation," Papers 2309.08910, arXiv.org, revised Sep 2023.
    6. Sukruth Suresh & T. Ravichandran, 2022. "Value Gains in Business Process Outsourcing: The Vendor Perspective," Information Systems Frontiers, Springer, vol. 24(2), pages 677-690, April.

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