Control and trust impact on outsourcing

This paper examines the relationships between control, trust and inter-organizational learning in outsourcing relationships, focusing on the question: How do different trust and control strategies affect the sharing and withholding of knowledge between client and vendor? Four studies are conducted; one, large international client company and three of its vendors. Based on these cases and a literature review, various trust and control strategies are examined, and factors influencing the mutual knowledge interaction are identified. The results show an internal disagreement among managers in the client company similar to the general disagreement between proponents of cost transaction theory and relational exchange theory respectively. The vendors express no hesitation to withhold especially proactive knowledge of relevance for the client when they are dissatisfied by the information and/or trust level offered by the client. Implications for more optimal client vendor relationships are developed as well as suggestions for further research.