Effects of risks on the performance of business process outsourcing projects: The moderating roles of knowledge management capabilities

Abstract Although business process outsourcing (BPO) can reduce cost and enhance the competitiveness of firms, the implementation of BPO projects is unsatisfactory. By integrating knowledge management capability theory and risk-based view, we develop a model of how different types of BPO risks affect project satisfaction and how knowledge management capability changes the influences of BPO risks. A survey of 121 BPO projects was conducted among BPO client department manager and project manager through a pairwise design. Empirical evidence reveals that social system, technical system, and project management risks negatively affect BPO project satisfaction. However, cultural, technological, and structural levels of knowledge management capabilities weaken the negative risk effects of social system, technical system, and project management, respectively. Different types of risks and knowledge management capabilities should be matched to achieve effective risk management.