Information technology (IT) outsourcing has grown in volume and in importance since the 1990s. Clients and vendors are becoming more interdependent in a complex collaborative setting. Client dependence, however, happens to be a double-edged sword with respect to vendor performance. In this study, we build a competitive mediation model, which explores both the bright and the dark sides of client dependence for vendor innovation based on relationship marketing and resource dependence as our theoretical lenses. We further analyze the role of vendor size as a moderator. On the one hand, our results demonstrate that client dependence has a positive effect, mediated by relationship satisfaction, on vendor innovation. On the other hand, client dependence also has a direct negative effect on vendor innovation. Vendor size seems to play an interesting moderating role where it attenuates the direct negative effect of client dependence; but it does not affect the positive mediating effect of relationship satisfaction. This research highlights dual theoretical routes that expose opposing effects of client dependence on vendor innovation. The findings also provide practitioners with implications regarding how to maximize benefits and yet minimize the obstacles from dependency in a dyadic outsourcing relationship.
All Science Journal Classification (ASJC) codes
- Client dependence
- Firm size
- Relationship marketing
- Resource dependence