Effects of initial and ongoing trust in IT outsourcing: A bilateral perspective

Much has been written about the need for trust in outsourcing relationships, but the literature has produced only a few theoretical models that explain the process that helps it evolve. We proposed a theoretical model by distinguishing ongoing beliefs, such as ongoing trust and distrust, from initial perceptions, such as initial trust and distrust, in the context of IT outsourcing, and then explored empirically how these interacted with one another the knowledge sharing experience between the participants, thus leading to a successful experience from both the outsourcer and the service provider. The model and its hypotheses were tested using two-stage survey data collected from IT outsourcing projects. Our results showed that the ongoing trust and distrust between the receiver and provider were crucial in attaining benefits and that the outcome was also affected by the perceptions of the participants at the initial stage of the outsourcing process. We also found that knowledge-sharing experience between the parties moderated the impact of initial trust or distrust on the ongoing trust or distrust in different ways: the change in the service providerʹs initial perceptions were apparently more visible and positive than those of the service receiverʹs, although both initial perceptions tended to be cognitively consistent. These results helped us understand how trust evolves over time in an outsourcing relationship, and enabled us to explore the different viewpoints of the service provider and receiver.