The Influence of Partner Knowledge Complementarities on the Effectiveness of IT Outsourcing

Abstract

Abstract Despite the importance of knowledge complementarities to inter-firm cooperation, few researchers in information systems (IS) have examined, to date, the construct of knowledge complementarities (KC), and none have examined its role in the success of IT outsourcing alliances. In this paper, we distinguish between potential knowledge complementarities (PKC) and synergistic value, which comprise KC. PKC is conceptualized as a multidimensional construct encompassing knowledge types (similar and specialized) and knowledge domains (business and IT). Further, we examine the extent to which PKC between the client and the vendor promotes success in IT outsourcing alliances. This research also includes relative absorptive capacity because it is relevant when complementary knowledge flows between organizations. We used data from a field study of 81 firms in Korea to test the proposed model. Our findings indicate that each dimension of PKC contributes uniquely to knowledge complementarities. The results also show that PKC is significantly associated with IT outsourcing effectiveness. Relative absorptive capacity is found to be a moderator between PKC and IT outsourcing effectiveness. The theoretical and practical implications of these findings are discussed in the paper. Keywords: IT outsourcingknowledge complementaritiesknowledge managementoutsourcing effectivenesspotential knowledge complementaritiesrelative absorptive capacity ACKNOWLEDGEMENT This research is partially supported by the Korea Sanhak Foundation, 2008 Research Support, and by the Ubiquitous Computing and Network (UCN) Project, provided by the Ministry of Knowledge Economy (MKE) 21st Century Frontier R&D Program in Korea.