Bilateral, Collective, or Both? Formal Governance and Performance in Multisourcing

While multisourcing offers benefits such as access to best-of-breed resources and enhanced competition, it also presents clients with a new governance challenge, namely the need to ensure that vendors not only deliver their individual contributions but also collaborate to produce a coherent joint outcome. Clients can address this challenge by combining bilateral governance focused on each vendor’s individual performance with collective governance aimed at the vendors’ joint performance. However, it is unclear how the simultaneous application of bilateral and collective governance affects multisourcing performance. Indeed, the literature falls short in systematically differentiating these governance mechanisms and empirically examining their interplay. Drawing on existing work on multisourcing and on the outsourcing governance literature, we argue that bilateral and collective governance direct efforts toward different performance dimensions (individual vs. joint), invoke different metaphors (market vs. team), and promote conflicting norms (competitive vs. cooperative), which can result in trade-offs when bilateral and collective governance mechanisms are combined. Results from a survey of 189 multisourcing arrangements support our expectation that bilateral and collective governance promote different performance dimensions. Notably, one collective governance mechanism, conflict management procedures, contributes to both individual and joint performance. We find substitutional effects between bilateral and collective governance in relation to joint performance but not individual performance, indicating that the benefits of collective governance for joint performance are more easily compromised than the benefits of bilateral governance for individual performance. We also observe complementary effects within collective governance mechanisms. Our key contribution lies in theorizing and empirically examining the effects and interplay of bilateral and collective governance in multisourcing

Impact of IT Multisourcing on vendor opportunistic behaviour - A research framework

IT Multisourcing (ITM), the provision of IT services by multiple interdependent vendors to a single client, is widely prevalent now. ITM, in principle, is believed to mitigate both strategic and operational risks of IT outsourcing for client organizations. Yet an in-depth inquiry into the association of ITM with these risks is largely missing in literature. There is limited research which systematically investigates the effects of ITM on different forms of risk. This paper develops a theoretical framework to understand the implications of ITM for the specific risk of vendor opportunistic behaviour, also termed ‘strategic risks’ of outsourcing. The fundamental attributes of ITM are identified and mechanisms through which they influence vendor opportunistic behaviour are explained. The advantages and limitations of the framework are discussed and future research directions are laid out

Bilateral, Collective, or Both? Formal Governance and Performance in Multisourcing

While multisourcing offers benefits such as access to best-of-breed resources and enhanced competition, it also presents clients with a new governance challenge, namely the need to ensure that vendors not only deliver their individual contributions but also collaborate to produce a coherent joint outcome. Clients may address this challenge by combining bilateral governance focused on each vendor’s individual performance with collective governance aimed at the vendors’ joint performance. However, it is unclear how the simultaneous application of bilateral and collective governance affects multisourcing performance. Indeed, the literature falls short in systematically differentiating these governance mechanisms and empirically examining their interplay. Drawing on existing work on multisourcing and on the outsourcing governance literature, we argue that bilateral and collective governance direct efforts towards different performance dimensions (individual vs. joint), invoke different metaphors (market vs. team), and promote conflicting norms (competitive vs. cooperative), which can result in trade-offs when bilateral and collective governance mechanisms are combined. Results from a survey of 189 multisourcing arrangements support our expectation that bilateral and collective governance promote different performance dimensions. Notably, one collective governance mechanism, conflict management procedures, contributes to both individual and joint performance. We find substitutional effects between bilateral and collective governance in relation to joint performance but not individual performance, indicating that the benefits of collective governance for joint performance are more easily compromised than the benefits of bilateral governance for individual performance. We also observe complementary effects within collective governance mechanisms. Our key contribution lies in theorizing and empirically examining the effects and interplay of bilateral and collective governance in multisourcing

How Formal Governance Affects Multisourcing Success: A Multi-level Perspective

Multisourcing has become a common sourcing model in recent outsourcing practice. Yet, the extant and relevant IS literature has so far offered limited insight into how to stipulate both individual (i.e., individual vendor) and joint (the entire vendor network) performance while ensuring governance efficiency. Our study set about addressing this gap by examining how these three dimensions of multisourcing success can be achieved through formal governance. Specifically, we considered bilateral formal control, collective formal control and conflict arbitration (among vendors) as key formal governance elements. Results from a pan-European survey of client firms pursuing multisourcing projects show that bilateral formal control sets the stage to achieve both individual and joint performance, while conflict arbitration strengthens individual performance, and collective formal control strengthens joint performance. Governance efficiency is improved when both collective formal control and conflict arbitration are high. We also found that conflict arbitration strengthens the positive effect of collective formal control on both individual and joint performance. Our findings highlight the importance of governing inter-vendor relationships in multisourcing arrangements as opposed to relying solely on bilateral governance. Our study extends the limited literature on IS multisourcing, and assists managers in considering the strategies they wish to pursue when choosing appropriate governance mechanisms

Deriving a Research Agenda for the Management of Multisourcing Relationships Based on a Literature Review

There has been considerable development in Information Technology (IT) outsourcing during the last two decades. Nowadays, practitioner-related as well as scholarly literature have identified multisourcing as an emerging key strategy. Multisourcing is described as the blending of services from multiple internal and external vendors. Especially in the case of multisourcing the management of relationships is complex. For a certain field of research it is important to have an overview of the existing literature and a common understanding of basic terms. In this article we identify and analyze the body of knowledge in the area of managing multisourcing relationships. We hence conduct a structured literature review based upon an established literature review framework. It can be observed that the current literature lacks depth in terms of management of multisourcing relationships and that only a few articles cover the aspects of multisourcing in detail. Particularly regarding performance management, governance and knowledge management of multisourcing relationships we propose further research. We subsequently deduce a detailed research agenda for future research options

Towards Multi-Sourcing Maturity: A Service Integration Capability Model

When outsourcing IT services, many enterprises today resort to multi-sourcing. It allows them to reduce costs and assemble a best-of-breed service portfolio. However, this usually also increases complexity. Despite the economic importance of multi-sourcing, though, there is no systematic understanding of the capabilities required to successfully integrate interdependent services and to manage multi-sourcing. This paper develops a capability model for service integration in a grounded coding approach based on literature and expert interviews. The model identifies six key capabilities and 18 sub-capabilities. We evaluate its applicability and validity via an empirical survey and two in-depth case studies. In addition, provide various insights into the implementation of service integration functions. Our contribution should provide orientation for companies how to direct their transformation efforts. It outlines an agenda for future research and builds a solid foundation for maturity models to improve multi-sourcing readiness – ultimately leading to more effective multi-sourcing solutions