Human resource outsourcing and organizational performance in manufacturing firms

Considerable anecdotal evidence suggests that an organization's use of outsourcing will have an influence on its performance. However, few empirical examinations of the outsourcing-performance relationship have been conducted. In this study, we analyze the relationship between the outsourcing of human resource (HR) activities, namely training and payroll, and firm performance. In addition, we hypothesize that the outsourcing-performance relationship is not the same for all firms. As a result, we test for the potential moderating effects of firm size. Our sample consists of 94 manufacturing firms representing 16 two-digit SIC code industries. Results indicate that both training and payroll outsourcing have implications for firm performance. However, findings regarding a moderating effect of firm size were inconclusive. (C) 2002 Elsevier Science Inc. All rights reserved.