Outsourcer Knowledge Protection, Psychological Contract Schema, and Project Performance: A Vendor's Perspective

Abstract

Despite the increased research attention directed to the importance of knowledge protection in collaborative business partnerships, such as IT offshore outsourcing, the extant literature offers conflicting views on whether knowledge protection inhibits project performance. Based on the transaction cost theory and the psychological contract theory, this study investigates how outsourcer knowledge protection affects project performance through partnership quality from the view of the vendors. Hypotheses were proposed and examined using data from 180 IT offshore outsourcing projects. This study finds that knowledge protection reduces partnership quality and project performance. Furthermore, a vendor's relational contract schema strengthens the negative effect of outsourcer knowledge protection on partnership quality, while a vendor's transactional contract schema weakens the negative effect. This study extends our understanding regarding the effects of knowledge protection on project performance and has important implications for outsourcing project management.