Make-or-buy decisions regarding temporary agency work – an empirical analysis of the decision process and expected effects

Abstract

Although the use of temporary agency work (TAW) in firms is heavily debated in the literature, the decision processes and motives behind using or not using TAW are often neglected or only analyzed in rough categories. We address these issues using a theoretical framework for HR outsourcing decisions. Specifically, we ask what triggers the decision about usage of TAW, whether firms have internal alternatives to using TAW, and what their expectations were when they made the decision. We focus on detailed expectations about the effects and analyze how users an d non-users of TAW differ in their respective expectations. Our analyses show that TAW is not a personnel service used by the majority of firms. Besides monetary costs, quality, and flexibility effects, stakeholder and transaction cost effects are relevant for the make-or-buy decisions. Users and non-users of TAW differ significantly in their expectations about some of the effect categories.

Keywords:

• HR outsourcing
• relevance of decision criteria
• temporary agency work

Notes

1. Thus, craftsmen, agriculture, and freelancers are not included in the survey. Agriculture was not of interest, because the intention was for a comparative analysis between the production and the service sector. The absence of craftsmen and freelancers should not have a significant impact on the results, because craftsmen as well as freelancers often have no or only few employees. With regard to HR functions, this allows a comparison with the small firms analyzed in the survey.

2. The combination of the last two categories seems plausible because if respondents do not expect any changes when using external HR providers, the effect category may not have any relevant impact on the decision for or against an outsourcing. This was merged with the answer category “not relevant,” as in both cases no changes relevant for the decision are expected.