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The Impact of Trust and Reciprocity on Knowledge Exchange: A Case Study in IT Outsourcing

The aim of this study is to analyse the mechanisms of trust and reciprocity that impact knowledge exchange in IT outsourcing projects. This study develops a framework that shows the impact of the trust and reciprocity components on knowledge sharing and IT outsourcing projects. IT outsourcing represents the way in which a company can accelerate the achievement of its goals by handing over all or some of its IT services to vendors. This study adopts a social exchange theory perspective. The conceptual model has been developed based on Wong and Cheung’s (2005) trust categories (Partners’ Performance, Partners’ Permeability, Relational Bonding, System-based Trust) and Cohen & Bradford’s (1989) exchange currencies model (Task-related Currencies, Position-related Currencies, Relationship-related Currencies, Personal-related Currencies). In this study, the researcher applied a single-case study qualitative approach combined with a core action research methodology covering three action research cycles. The researcher collected the data using two types of interviews: semi-structured and focus group interviews. The total number of conducted interviews was 45, covering managers, team leaders, and IT technical staff. Computer Aided Qualitative Data Analysis Software (CAQDAS) was used to analyse the collected qualitative data. The study was a good chance for the researcher and participants to apply action research methodology for the first time in the organisation. An action research co-generative knowledge creation module was applied to provide a workable solution for the identified study question. Four factors were found to make a significant contribution to reciprocity: a well-designed contract, client capability, operational readiness, and the client-vendor relationship. Four elements were found to have a significant impact on building mutual trust between the client and the vendor: a well-designed contract, vendor capability, transparency, and communication. The study found that two factors can assist in increasing the level of trust and the vendor’s strengths during the IT outsourcing process. Those two assisting factors are external consultant support (in the contract negotiation phase) and top management support (in the contract implementation phase). The main contribution of the study is the conclusion that both reciprocity and trust must be combined to have effective knowledge transfer. Trust and reciprocity are not one single factor, however; each is a category with associated subcategories. Outsourcing contracts and vendors’ good intentions are not in themselves enough to achieve the outsourcing targets. The salient outcomes of the study are the realisation of the importance of having skilled resources on the client’s side, and that these resources must not be used only to monitor the vendor; rather, the client must have a plan to engage and integrate those resources with the vendor’s activities. The study also advises the client’s management to consider the contract as a means to IT outsourcing success and not an end in itself. A continuous effort is needed during the project to achieve the company’s targets and to overcome any gaps in the signed contract.