Purpose
Drawing on signaling theory, this paper aims to argue in favor of a “placebo outsourcing effect” (POE) consisting of a positive relationship between provider’s bluffing and customer satisfaction.
Design/methodology/approach
The authors applied prediction-oriented segmentation SEM on a dyadic sample of 171 outsourcing relationships.
Findings
The authors highlighted two segments that display a form of POE, representing about three-quarters of the customer-provider dyads. The first segment exhibits a positive relationship between the provider’s bluffing and customer satisfaction that is further strengthened by the provider’s reputation and customer’s operational capabilities, while for the other segment, the provider’s bluffing has positive interactions with both operational capabilities and outsourcing experience. These findings show that service providers have reached the bluffing proficiency that enables them to bluff customer firms with varying levels of operational capabilities and outsourcing experience by using the most appealing signals for every type of customer.
Practical implications
Based on the findings, the authors provided to customer firms extensive guidelines to avoid the POE by frustrating service provider’s bluffing proficiency.
Originality/value
This study’s originality resides in the amendment of the disconfirmation paradigm of satisfaction in the outsourcing context by introducing and testing the POE.
