How to Drive Innovation Within Outsourcing Relations: The Role of Performance Evaluation and Management Control Systems

The themes of performance and outsourcing have been the subjects of extensive studies in academic literature for a long time. Literature has explored a variety of control structures and practices, as archetypes of management control within and between organizations, with the aim of identifying the optimal control design. The design of management control in ITO becomes part of a general problem of effective governance structures and the role of accounting information. However, many accounting related aspects remain unexplored. We explore in this paper the “lateral processing of information” [1], trying to move beyond the static concept of control, adopting a dynamic view, with the aim of better taking into account both the evolution and change of the outsourcing relationship as well as the factors that have influenced this process. Our empirical study focuses on the outsourcing relationship between a public healthcare organization, in Italy, and its supplier. This case highlights how a management control system acts as a mechanism that facilitates to mediate, shape and construct outsourcing relations through self-regulating and orchestration mechanisms.