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Mitigating risks in a shared service relationship: the case of a Malaysian bank

Author

Listed:
  • Rozita Amiruddin
  • Aini Aman
  • Sofiah
  • Auzair
  • Noradiva Hamzah
  • Ruhanita Maelah

Abstract

Purpose - A shared service (SS) arrangement involves an intra‐firm interrelationship, since the SS centre (SSC), operated as an independent business unit, provides services to clients who are other independent business units in the same company group. The purpose of this study is to provide an understanding of risks and controls used in mitigating SS risks. Design/methodology/approach - This study adopts a qualitative approach using a case study of a SSC in a bank group in Malaysia. The risks and control framework developed by Das and Teng was used to analyse the appropriate control mechanisms for mitigating internal outsourcing risks, namely relational risk and performance risk. Findings - The main relational risk identified is the possibility of opportunistic behaviour. However, this risk could be mitigated through social control especially when both parties share norms and values. Performance risks in SSC are mainly related to unsatisfactory services in terms of incomplete information, system errors and human mistakes. These risks could be mitigated using either behaviour control or output control. Behaviour control can be exercised through performance reporting, while output control can be achieved through key performance indicators (KPIs) and service level agreements (SLA). Research limitations/implications - This study is limited to a single case study of a SSC with a certain type of arrangement and discusses business process outsourcing (BPO) in general. Future research may examine cases with other SS arrangements, detailed examination of each BPO and incorporate multi‐perspective views from both SSC and their clients. Issues concerning changes in control in the evolving situation of SSC and bargaining power and trust in mitigating SSC risks are also worth exploring. Practical implications - The study's findings enable practitioners to draw insights to develop effective control strategies to mitigate risks in intra‐organizational relationships such as SSC. Originality/value - The paper adds to our knowledge of control mechanisms for mitigating risks in the SS relationship, which is a relatively new concept in the literature.

Suggested Citation

  • Rozita Amiruddin & Aini Aman & Sofiah & Auzair & Noradiva Hamzah & Ruhanita Maelah, 2013. "Mitigating risks in a shared service relationship: the case of a Malaysian bank," Qualitative Research in Accounting & Management, Emerald Group Publishing Limited, vol. 10(1), pages 78-93, April.
    • Handle: RePEc:eme:qrampp:v:10:y:2013:i:1:p:78-93
    DOI: 10.1108/11766091311316202
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    Citations

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    Cited by:

    1. Jolanta Sloniec, 2021. "A Longitudinal Analysis of IT Outsourcing in Large Polish Organizations," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 2), pages 439-452.
    2. Dragos Vieru & Pierre-Emmanuel Arduin, 2016. "Sharing Knowledge in a Shared Services Center Context: An Explanatory Case Study of the Dialectics of Formal and Informal Practices," Post-Print hal-01458031, HAL.
    3. Richter, Philipp Clemens & Brühl, Rolf, 2017. "Shared service center research: A review of the past, present, and future," European Management Journal, Elsevier, vol. 35(1), pages 26-38.
    4. Dragos Vieru & Pierre-Emmanuel Arduin, 2016. "Sharing Knowledge in a Shared Services Center Context: An Explanatory Case Study of the Dialectics of Formal and Informal Practices," Post-Print hal-01292702, HAL.
    5. Richter, Philipp Clemens & Brühl, Rolf, 2020. "Ahead of the game: Antecedents for the success of shared service centers," European Management Journal, Elsevier, vol. 38(3), pages 477-488.

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