The Link between Vendor Certification and Performance in IT Outsourcing: A Tale of Two Stories

Abstract

There has been a great deal of ambiguity in the relationship between vendor certification and vendor performance in the outsourcing context. In this study we build a competitive mediation model, where we examine both the direct and the indirect effects of vendor certification on vendor growth. Using a combination of primary data (i.e., survey) and secondary data from a sample of 120 IT vendors in India, we find that vendor certification directly helps vendor growth but it hurts vendor innovation and therefore indirectly hinders vendor growth. We further explore the moderating role of the number of clients. Our results demonstrate that an increase in the number of clients does not moderate the positive relationship between certification and growth; however, it weakens the negative relationship between vendor certification and innovation. In this sense, a large client base seems to attenuate the dark side of certification in organizational innovation activities.