How Guanxi Orientation Influence The IT Outsourcing Performance

With the trend of IT update increasingly and the integration of the global economic, IT outsourcing has become the hotspot of a new round of international industrial transfer, and China has become one of the major countries as vendor of IT outsourcing. However, the focus has been on the contractors’success in IT outsourcing research recently, little is known about the factors that affect the vendors’ success in the outsourcing contract. As well known, vendor as a vital part of the IT outsourcing, vendors’ success also have an important effect on the whole IT contract activity. Based on the fact that China is in the middle of the economic transition process, the outsourcing companies gradually see guanxi, as the effective informal institution, as a new way to improve their performance. IT outsourcing industry as a service industry, their service quality is the foundation of getting an advantage stage in the market. There is little of research that conducts empirical examination of mechanism of guanxi and service quality, and how they both work on the vendors’performance.In this study, we conduct a theory-based empirical research of IT outsourcing performance from the vendors’ perspective; in order to understand the mechanism, we proposed and tested the vendors’ guanxi-service quality-IT outsourcing performance theoretical framework. First of all, based on the social capital theory, we see guanxi as the independent variable of the model, and identify service quality as the mediating variable. As for IT outsourcing performance, we identify it as the dependent variable of the model, which was measured by strategic performance, operational performance and satisfaction. Secondly, based on the analyzing prior literature, we analysis the relationship of the variables, and come up with the measurement model and we proposed four research hypotheses. In order to test our hypotheses, we conduct the questionnaire method to collected237valid questionnaires. Finally, we used the data to have reliability and validity tested and we adopt the structural equation modeling and moderation method to empirically test the hypothesisThe empirical research results showed that service quality has a direct impact on the vendors’ outsourcing performance, which is a significantly important antecedent of outsourcing performance. However, there is no significant relationship between guanxi and IT outsourcing performance. And guanxi do have a positive effect on service quality. Moreover, as the mediate role of our model, service quality fully mediated the relationship of guanxi and IT outsourcing performance. Guanxi have no significantly direct effects on firm’s performance, but it could improve service quality to indirectly affect firm’s performance. This study also found that guanxi can effectively regulate the mediation role of service quality. The effect of service quality on firm’s performance under the circumstance of high level of guanxi is strikingly greater than that under the low level of guanxi; through further analysis of the study results, we find that IT outsourcing firms need to build a relative high level of guanxi, in the meantime, also need to pay more attention to improve the service quality, only in this way can the firms maintain the competition advantage.