Governance adaptation in technology sourcing: a dynamic problem-solving perspective

Purpose This study examines the evolution of technology outsourcing and governance strategies in response to dynamic technological changes. Drawing on the problem-solving perspective, it investigates how governance structures and sourcing strategies evolve across phases of outsourcing and contract management. Design/methodology/approach The study employed a longitudinal case study of a European subsidiary of a multinational bank to analyze its technology sourcing practices. Using an abductive approach, the study examined the interplay between problem typologies and governance mechanisms across different phases of sourcing strategy implementation. Data included 56 interviews, contract documents and internal strategy reports. Findings The study develops a four-stage process model of governance adaptation in technology sourcing, showing how organizations move from initial problem framing, through the detection of misalignments, to the re-framing of problems and the refinement of governance arrangements. The model demonstrates how shifts between single-, multi- and concurrent-sourcing strategies depend on the decomposability of technology problems, and how effective performance requires aligning market-, authority- and consensus-based governance with these different problem types. Originality/value This research contributes a novel relational-processual problem-solving perspective on technology sourcing and governance adaptation, emphasizing the iterative alignment of problem complexity, governance and sourcing strategies. It provides actionable insights for organizations managing dynamic and interdependent technology ecosystems, fostering innovation and strategic agility.