Relational Governance in Offshore Outsourcing Partnerships

Offshore outsourcing has facilitated exchange of knowledge and services with clients and suppliers situated in diverse economic markets. To better manage knowledge exchange and mitigate risks from international partnerships, client and suppliers use various elements of relational governance practice. This study investigates three cases engaged in supplier-client relationships, to examine how the operational and social aspects of the knowledge exchange are governed. Findings reveal that offshore partnerships are first constituted with service level agreements, which set control measures and layout business expectations from both partners. Boundary gate keepers bring further accountability across firms by designing social networks for capturing and sharing of knowledge, thereby reducing each partner’s perception of risk. The study contributes to existing studies on offshore knowledge markets and explains how relational governance practices operate in a global sociotechnical setting. In doing so, the study demonstrates how knowledge processes, social networks and market economies influence relational elements for supporting the exchange.