Also, contractual governance and relational governance have been underlined as critical
skills to manage inter-organizational relationships (Goo et al. 2009; Poppo and Zenger 2002). Contractual governance refers to governance of an outsourcing arrangement using a formal written contract which specifies obligations or promises to perform particular actions to achieve expected objectives in the future (Macneil 1978; Poppo and Zenger 2002). Relational governance refers to governance of an outsourcing arrangement through social processes that promote trust, information exchange, knowledge sharing, and harmonious conflict resolution (e.g., Goo et al. 2009; Poppo and Zenger 2002). The extant literature has illustrated that contractual governance and relational
governance are critical to outsourcing performance (e.g., Lacity et al. 2010; Lacity et al. 2011a). Since both capabilities and governance mechanisms are important for outsourcing performance, it is essential to understand how to effectively manage specific capabilities with governance mechanisms in order to produce better service quality and generate greater client's economic benefits.