Conceptualising HR outsourcing effectiveness and scale development of HROSERVPERF using PLS-SEM

Abstract

PurposeThis study aims to provide a conceptualisation of HR outsourcing (HRO) effectiveness from a service quality perspective and subsequently develop a scale – HROSERVPERF to measure HRO service performance underpinned S-O-R theory.Design/methodology/approachGrounded on theoretical conceptualisation, literature and information collected through semi-structured interviews, HRO service performance items pool were generated. 257 responses from manufacturing firms in Malaysia that have outsourced their HR were collected. PLS-SEM is used for scale confirmation and validation.FindingsThe conceptualisation of HRO effectiveness and HRO service performance suggests a need for scale development that encompasses service quality-satisfaction-loyalty framework supported by S-O-R theory. Operational improvement, resource alignment and service delivery emerged as the service performance dimensions of HROSERVPERF.Research limitations/implicationsThis study was limited to manufacturing firms in Malaysia, hence little generalisation could be drawn beyond this context. However, this serves as future research opportunities.Practical implicationsHR managers and service providers can employ HROSERVPERF to measure and improve HRO service performance more effectively. Service providers can re-strategise and target their scarce resources to better retain their clients.Originality/valueThis is the first paper that provides HRO effectiveness conceptualisation from a service quality perspective followed by a scale development with formative measures using PLS-SEM underpinned S-O-R theory.