What is the impact of specific knowledge-transfer processes on the level of shared knowledge and, in turn, on outsourcing performance in outsourcing relationships? Drawing on a series of case studies covering IT providers and banks, we investigate several applied knowledge-transfer processes dedicated to the transfer of explicit or tacit knowledge between outsourcing banks and their providers. We examine the differential influence of various types of knowledge transfer on shared knowledge between the parties and on the resulting outsourcing performance. Results depict the differential impact of various knowledge-transfer processes dedicated to the transfer of explicit, or tacit knowledge, respectively, on the development of shared knowledge. Interestingly, the combination of both knowledge-transfer processes dedicated to the transfer of explicit knowledge and those dedicated to the transfer of tacit knowledge proves to be most effective. Furthermore the results indicate that high levels of shared knowledge positively influence outsourcing performance. In addition to previous literature, we found transfer processes for explicit knowledge in an outsourcing context to consist of two dimensions: The content dimension, primarily focused on in literature, and the sender–receiver dimension of transfer processes which are rarely addressed in outsourcing literature. The content dimension embraces mechanisms such as trainings, SLAs and standards that define how content has to be interpreted, whereas the sender–receiver dimension of transfer processes of explicit knowledge defines explicit, documented interaction structures between parties.
During the last decades of IS research, a vast amount of work on knowledge has accumulated and proved to be important for firms. Knowledge allows firms to add value, and it is argued that the ability to generate knowledge is at the core of the theory of the firm (Amit and Schoemaker, 1993, Hitt et al., 2001 and Peppard and Ward, 2004) and that knowledge is the most critical asset of the firm (Grant, 1996). This importance is highlighted by a recent study concerning supply chain flexibility. Gosain, Malhotra, and El Sawy (2004) found that deep coordination-related knowledge was the single most important factor positively influencing supply chain flexibility. This knowledge was far more important than data connectivity and modularity issues, or the standardization of process and content interfaces. In their conclusion regarding the importance of knowledge, they stated: “This shows that the state of an enterprise's knowledge relevant to its sensing and adaptation capabilities for coordination should be assessed by reference to underlying mechanisms by which knowledge is acquired, contextualized, integrated, maintained, retrieved, and used” (Gosain et al., 2004, p. 32).
Knowledge, defined as justified true belief (Nonaka, 1994), is the core of the knowledge-based theory (KBT) (Grant, 1996), or knowledge-based perspective, that builds upon the resource-based view (RBV) (Alavi & Leidner, 2001). The knowledge-based theory views “the firm as a dynamic, evolving, quasi-autonomous system of knowledge production and application” (Spender, 1996, p. 59). This perspective contends that knowledge is the principal resource of firms and that production requires the integration of a broad range of knowledge (Grant, 1996). To develop this principal resource Nickerson and Zenger (2004) suggest that the knowledge stock can be expanded by acquiring or absorbing knowledge from outside the firm or by generating new knowledge by, first, the identification of a problem and, second, the discovery of a valuable solution.
Before concluding, several limitations of our study are discussed. First, the use of perceptual measures to assess the outsourcing performance might create a limitation by creating a bias in the dependent variables. Second, we investigated one point in time and are, therefore, not able to analyze the dynamics of the knowledge-transfer processes and the development of shared knowledge over time. Third, the provider cases cannot be used to investigate our second research question regarding the connection between shared knowledge and performance, because we doubt that these providers are able to realistically, sufficiently, and objectively assess their own performance. Fourth, in most cases we used a single respondent to assess outsourcing performance, as well as the level of shared knowledge, which might imply a bias. This limitation was diminished by interviewing the expert in charge and by balancing the view of the manager, using additional information, such as annual reports and press clippings.Referring to the summary table for banks in the previous section, our case study indicates a connection between shared knowledge and performance. There is an indication that high levels of shared knowledge positively influence outsourcing performance (H3) (see Fig. 2). Surveyed banks that have high levels of shared knowledge, e.g. by speaking the same language as the provider, regarding content, or having business-trained employees, overall, are very content with the outsourcing performance. Thus, H3 is supported. As a result, we addressed a gap in the literature, regarding this link, and provided an indication of the influence of shared knowledge on outsourcing performance.
