Outsourcing projects are reported to frequently fail. Part of the reasons for such failures is an insufficient understanding of service level agreements (SLAs). This analysis adds to the collective knowledge on SLA contract design via examining effects of contract framing on two important factors of outsourcing success: commitment and knowledge. Via a scenario-based experiment with novices and professionals, the results show that penalty framing (as opposed to bonus framing) decreases knowledge sharing willingness and attitude-related forms of commitment while increasing client-oriented forms of commitment. No differences in internally-motivated forms of commitment and in behaviour between novices and professionals are found. The study adds to the collective knowledge on SLA design, commitment and knowledge sharing.
Fehrenbacher, Dennis D., "THE DUAL ROLE OF PENALTY: SERVICE LEVEL AGREEMENT DESIGN AND ITS EFFECTS ON INTRA-FIRM KNOWLEDGE SHARING AND COMMITMENT OF SERVICE PROVIDERS" (2016). Research Papers. 154.