Relational Exchange Theory and IS Outsourcing: Developing a Scale to Measure Relationship Factors

Outsourcing as a means of meeting organizational IS needs is now a commonly accepted and growing practice. Early research into the outsourcing phenomenon focused on why organizations outsourced (determinants of outsourcing, advantages and disadvantages of outsourcing) and how organizations outsourced (what functions to outsource, how to evaluate the vendor, how to structure the contract). Recently, an emerging stream of research has focused on the relationship between the vendor and the customer. Ascertaining the elements of that relationship would contribute to an enhanced understanding of the relationship and the role it plays in the ultimate success or failure of the outsourcing arrangement. Accordingly, this paper uses Relational Exchange Theory to furnish a conceptual basis for identifying the individual constructs that comprise a relationship. It then proceeds to develop a set of items to measure those constructs. Structured equation modeling is utilized to test the items, using survey data collected from a number of U.S. outsourcing customers.