This research focuses on the role of customer behavior in service outsourcing relationships that are governed by outcome-oriented contracts. It aims to explain how non-collaborative customer behavior impedes the effectiveness of outcome-oriented contracts to align the goals and incentives of the customer and service provider, and leads to service provider opportunism.
Nine hypotheses are developed regarding customer behavior and the reaction of the service provider to this. These are tested using structural equation modelling with data from 213 service outsourcing relationships.
Outcome-orientated contracts in service outsourcing may have unintended consequences because they create value attribution ambiguity. This ambiguity induces non-collaborative customer behavior, which, in turn, results in service provider opportunism. This reveals a paradox, where customer behavior aimed at curbing service provider opportunism instead induces such opportunism. This chain of effects can be counteracted by increased outcome attributability, which reduces the ambiguity and, thus, the motivation for non-collaborative customer behavior.
This research extends the existing literature by stressing that non-collaborative customer behavior is a key reason why outcome-oriented contracts fail in effectively governing outsourcing relationships, and that this can be counteracted by increased outcome attributability.