Pevious IS outsourcing research studies failed to provide evidences on how IT client-vendor relationships should be governed to ensure project success and relational continuity. More importantly, it is even challenging for companies to achieve outsourcing success in transition economies facing an environment characterized by institutional instability. This article draws from theories of institutions and organizations to develop a model examining outsourcing relationship governance mechanisms which would affect outsourcing success in state-owned and non-state-owned Chinese companies. Results of 72 state-owned and 54 non-state-owned outsourcing projects show that the positive relationship between contractual governance and outsourcing success is stronger in state-owned firms than in non-state-owned firms. On the other hand, non-state-owned firms have stronger effects on the relationships between relational governance and outsourcing success, and between outsourcing success and relational continuity.