The Effects of Outsourcing and Devolvement on the Strategic Position of HR Departments

Abstract

AbstractThis article critically examines how outsourcing and devolvement of HR activities influence the strategic position of HR departments. Past research has offered conflicting predictions about their impact, ranging from a very positive move of HR departments to powerful strategic positions to a rather negative move toward marginality as their tasks are being taken over by either external providers or line managers. In an effort to resolve existing inconsistencies in the literature, we base our propositions on the strategic contingency theory of subunit power (Hickson, Hinings, Lee, Schneck, & Pennings, 1971). Our results suggest that the strategic position of HR departments is negatively influenced by devolvement to line management and positively influenced by outsourcing of noncore HR tasks. No significant effect of outsourcing core HR activities was found. © 2013 Wiley Periodicals, Inc.