Impact of effective knowledge sharing on outsourcing performance

Outsourcing projects are far more strategically-inclined in today's post-industrial knowledge economy than in the past decades. This leads to a tight inter-reliance between the client and vendor - inevitably requiring that they be constantly aware of each other's knowledge needs and requirements. However, the wide research gap between theory and practice is due to the high complexity and hence lack of established theories in this field. To contribute to filling this gap, a case study is conducted at a leading Dutch organization which reveals the significance of knowledge issues in outsourcing arrangements. Knowledge sharing occurs across hard system platforms and structures (e.g. an IT-based KMS) and soft systems (i.e. human-centric mediums). Knowledge that is shared across hard systems is codified and can be readily diffused. Complexities that emerge are resolvable, e.g. through technical support. Knowledge that is shared across soft systems is tacit in nature and remains largely unstructured. Complexities arising are fuzzy, wicked issues that appear unwieldy due to the high degree of latency involved.
To understand this phenomenon, Boisot's Information Space model (1998) which explains knowledge diffusion at different levels of codification and abstraction, is extended to the case of outsourcing to explain the underlying dynamics involved in knowledge sharing that impact outsourcing performance. The study provides sufficient ammunition to enunciate that effective knowledge sharing i.e. across both hard and soft systems, is necessary to enhance outsourcing performance. Further, striking the right balance between what to hoard and what to share is also of utmost significance for outsourcing organizations. This research will be extended to investigate how effective knowledge sharing further plays a pivotal role in inter-organizational learning for outsourcing organizations and how this leads to higher innovation and long-term sustainable benefits.