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HR OUTSOURCING AND ITS IMPACT: THE ROLE OF TRANSACTION COSTS

Published on Mar 1, 1999in Personnel Psychology6.93
· DOI :10.1111/j.1744-6570.1999.tb01816.x
Brian S. Klaas18
Estimated H-index: 18
(USC: University of South Carolina),
John A. McClendon9
Estimated H-index: 9
(TU: Temple University),
Thomas W. Gainey3
Estimated H-index: 3
(USC: University of South Carolina)
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Abstract
Although HR activities have traditionally been performed in-house, organizations are increasingly relying on outside contractors to perform these activities. Using a Transaction Cost Economics perspective, this study examined whether organizational-level factors moderated the relationship between the degree of reliance on HR outsourcing and the perceived benefits produced by outsourcing. Moderated regression was performed using data provided by over 300 HR executives on outsourcing levels, organizational characteristics, and the perceived impact of outsourcing. Support was found for a number of the transaction cost hypotheses regarding the impact of organizational characteristics. Specifically, the relationship between the degree of outsourcing and the perceived benefits generated was moderated by reliance on idiosyncratic HR practices, uncertainty, firm size, and cost pressures. No support was found for hypotheses regarding the moderating effect associated with pay level, overall outsourcing emphasis, or strategic involvement by HR.
  • References (30)
  • Citations (129)
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References30
Newest
Published on Dec 7, 2006in Personnel Psychology6.93
David E. Terpstra19
Estimated H-index: 19
(University of Mississippi),
Elizabeth J. Rozell5
Estimated H-index: 5
(Missouri Southern State University)
Scholars have noted the relative lack of research on the contribution of effective staffing practices to organizational level measures of performance (Schmitt & Schneider, 1983). We collected survey data from the heads of the HRM departments of 201 organizations regarding the extent of use of five staffing practices supported by the academic literature. We also investigated whether organizations that used more of these practices had higher levels of profitability and sales growth than organizati...
Published on Sep 1, 1998in Human Resource Management Review3.63
David P. Lepak32
Estimated H-index: 32
(UMD: University of Maryland, College Park),
Scott A. Snell39
Estimated H-index: 39
(PSU: Pennsylvania State University)
Abstract This article explores the emergence of virtual HR in organizations as a response to the increased presence of external structural options to perform HR services as well as the growing sophistication of information technologies. We examine the motives that are encouraging HR managers to implement these virtual arrangement and, drawing from transaction cost economics and the resource-based view of the firm, we present an architectural framework that can be used to understand and map the u...
Published on Jun 1, 1997in Personnel Psychology6.93
Sara L. Rynes42
Estimated H-index: 42
(UI: University of Iowa),
Marc Orlitzky21
Estimated H-index: 21
(UI: University of Iowa),
Robert D. Bretz5
Estimated H-index: 5
(UI: University of Iowa)
Although much professional and managerial hiring involves experienced workers, previous recruitment research has focused almost exclusively on new college graduates. To remedy this imbalance, 251 staffing professionals were surveyed concerning experienced-versus-college hiring practices in their organizations. Results suggest that a majority of positions requiring a college degree are filled with experienced workers. Experienced hires are evaluated more highly than new graduates on most characte...
Published on Oct 1, 1996in Organization Science3.26
Kathleen R. Conner1
Estimated H-index: 1
,
C. K. Prahalad40
Estimated H-index: 40
This paper develops a resource-based---knowledge-based---theory of the firm. Its thesis is that the organizational mode through which individuals cooperate affects the knowledge they apply to business activity. We focus on the polar cases of organization within a firm as compared to market contracting. There will be a difference in the knowledge that is brought to bear, and hence in joint productivity, under the two options. Thus, as compared to opportunism-based, transaction-cost theory, we adv...
Published on Aug 1, 1996in Academy of Management Journal7.19
Brian E. Becker26
Estimated H-index: 26
(UB: University at Buffalo),
Barry Gerhart39
Estimated H-index: 39
(Vandy: Vanderbilt University)
We describe why human resource management (HRM) decisions are likely to have an important and unique influence on organizational performance. Our hope is that this research forum will help advance ...
Published on Jan 1, 1996in Academy of Management Review10.63
Sumantra Ghoshal51
Estimated H-index: 51
(LBS: London Business School),
Peter Moran7
Estimated H-index: 7
(Ad: INSEAD)
Transaction cost economics (TCE), and more specifically the version of TCE that has been developed by Oliver Williamson (1975, 1985, 1993b), has become an increasingly important anchor for the analysis of a wide range of strategic and organizational issues of considerable importance to firms. As argued by some of its key proponents, the theory aims not only to explain but also to influence practice (Masten, 1993). In this article, we argue that prescriptions drawn from this theory are likely to ...
Published on Jan 1, 1996in Academy of Management Review10.63
Peter Moran7
Estimated H-index: 7
(Ad: INSEAD),
Sumantra Ghoshal51
Estimated H-index: 51
(LBS: London Business School)
The article reports on the economic theory of industrial organization. The authors focus on responding to a criticism of their article “Bad for Practice: A Critique of Transaction Cost Theory.” They go on to suggest that markets and industrial organizations feature a vastly different set of dynamics. It is suggested that managers cannot run business enterprises or corporations based on transactional cost economics (TCE) because that particular theory is meant to decipher market situations. The a...
Published on Aug 1, 1995in Academy of Management Journal7.19
Patrick M. Wright52
Estimated H-index: 52
(A&M: Texas A&M University),
Dennis L. Smart4
Estimated H-index: 4
(UNO: University of Nebraska Omaha),
Gary C. McMahan20
Estimated H-index: 20
(SC: University of Southern California)
This study examined the relationships among strategy, human resources, and performance among National Collegiate Athletic Association (NCAA) basketball teams. Results based on survey data and a widely used performance rating indicated that coaches' preferred strategies influence the characteristics that they look for in recruits. Also, teams implementing a strategy different from a coach's preferred strategy performed less well than those implementing the preferred strategy. Finally, human resou...
Published on Jun 1, 1995in Academy of Management Journal7.19
Mark A. Huselid22
Estimated H-index: 22
(RU: Rutgers University)
This study comprehensively evaluated the links between systems of High Performance Work Practices and firm performance. Results based on a national sample of nearly one thousand firms indicate that these practices have an economically and statistically significant impact on both intermediate employee outcomes (turnover and productivity) and short- and long-term measures of corporate financial performance. Support for predictions that the impact of High Performance Work Practices on firm performa...
Published on Feb 1, 1995in Academy of Management Journal7.19
Ranjay Gulati40
Estimated H-index: 40
(NU: Northwestern University)
Exploring the factors that explain the choice of governance structures in interfirm alliances, this study challenges the use of a singular emphasis on transaction costs. Such an approach erroneously treats each transaction as independent and ignores the role of interfirm trust that emerges from repeated alliances between the same partners. Comprehensive multiindustry data on alliances made between 1970 and 1989 support the importance of such trust. Although support emerged for the transaction co...
Cited By129
Newest
Published on Nov 1, 2018in Human Resource Management2.93
Clint Chadwick12
Estimated H-index: 12
(KU: University of Kansas),
Pingshu Li4
Estimated H-index: 4
(University of Texas at Austin)
Published on Sep 1, 2018in Journal of Business Research4.03
Kristin C. Irwin1
Estimated H-index: 1
(UA: University of Alabama),
Karen Landay2
Estimated H-index: 2
(UA: University of Alabama)
+ 3 AuthorsPatrick R. Geho3
Estimated H-index: 3
(MT: Middle Tennessee State University)
Small/medium enterprises (SMEs) constitute most firms in the United States; thus, the issues that impact their performance are significant for many stakeholders. A factor that enhances firm performance is a firm's adoption of an entrepreneurial orientation (EO). However, studies do not extensively examine the role of human resources, which are important for SMEs, in the EO/performance relationship. The current study extends the knowledge-based view (KBV) of the firm, which focuses on knowledge g...
Published on May 8, 2018in International Journal of Manpower0.88
Klaas Szierbowski-Seibel (University of Paderborn), Rüdiger Kabst22
Estimated H-index: 22
(University of Paderborn)
Purpose Two simultaneous trends have arisen in the field of HRM: the development of the HR function towards a more strategic, value adding unit and the trend of HR outsourcing (HRO). Opinions are divided in the field of HRM research regarding the interdependences between these two trends and whether the HR function has a positive or negative effect. Therefore, this study examines the triangular relationship among strategic HR integration, the HR-to-employee ratio and HRO. Design/methodology/appr...
Published on Jan 1, 2018
Patrick M. Wright52
Estimated H-index: 52
,
Anthony J. Nyberg13
Estimated H-index: 13
,
Robert E. Ployhart50
Estimated H-index: 50
Abstract Research in strategic human resource management (SHRM) has evolved over the past 30 years to become more theory based and to exhibit greater empirical rigor. However, much has changed in the external environment that makes the existing theories, approaches, and methodologies inappropriate for addressing the questions that organizations face in managing their human resources today. In this chapter we discuss a number of environmental changes impacting organizations and identify tensions ...
Published on Nov 26, 2017
Jay B. Barney56
Estimated H-index: 56
(OSU: Ohio State University),
Asli M. Arikan4
Estimated H-index: 4
(OSU: Ohio State University)
Published on Nov 1, 2017in Journal of Business Research4.03
Charmi Patel4
Estimated H-index: 4
(University of Reading),
Pawan Budhwar46
Estimated H-index: 46
(Aston University)
+ 1 AuthorsAnastasia A. Katou13
Estimated H-index: 13
(UoM: University of Macedonia)
Past research on HR outsourcing (HRO) has offered conflicting views about its impact on HR's strategic position. This study highlights the processes by which decisions to outsource HR are made, followed by the processes implemented post such decisions and their effect on the HR function. Using a case study approach and semi-structured interviews (N = 35) within a German subsidiary of a US MNC, we provide a framework of HR processes seeking to achieve standardization in terms of harmonization of ...
Julia Levashina9
Estimated H-index: 9
(KSU: Kent State University),
Jessica A. Peck2
Estimated H-index: 2
(KSU: Kent State University),
Linda Ficht1
Estimated H-index: 1
(BU: Bloomsburg University of Pennsylvania)
Background checking (BC) is a process of verifying job-related information provided by job applicants. The use of recommended BC methods and practices was investigated through a survey of companies. On average, employers used five BC methods and 15 BC practices. Companies tend to perform the same BC across all types of positions. Forty-seven percent of companies outsourced BC. Several factors influenced BC such as the size of the company, outsourcing, who is responsible for BC, perceived effecti...
Carmen Paz-Aparicio1
Estimated H-index: 1
,
Joan E. Ricart17
Estimated H-index: 17
,
Jaime Bonache
Purpose Offshoring has been studied widely in the literature on strategic management and international business. However, apart from its consideration as an administrative activity, scant attention has been paid to the offshoring of the human resource (HR) function. Research in this regard has instead focussed on outsourcing (Reichel and Lazarova, 2013). The purpose of this paper is to achieve a better understanding of companies’ decisions to offshore HR activities. It adapts the outsourcing mod...
Published on Feb 13, 2017
Emmah Nyarangi (University of Eastern Africa, Baraton)
Purpose: This study sought to assess the perceptions of Human Resource (HR) outsourcing on Organizational performance on multinational companies in Nairobi. The study was to be guided by the following research objectives; to establish what functions are most outsourced by multinationals in Nairobi Kenya and to investigate the role of Human Resource Outsourcing on organizational performance in multinational companies.Methodology: The study used descriptive statistics research design. The descript...