Why Sharing Is Synergy: The Role of Decentralized Control Mechanisms and Centralized HR Capabilities in Creating HR Shared Service Value.

Purpose: HR shared service centers (SSCs) have been claimed to innovate human resource management service delivery by centralizing resources and decentralizing control and, in doing so, create value for other business units. In response, to explain the value of HR shared services for the business units served, the purpose of this paper is to test hypotheses on the joint influence of HR SSC operational and dynamic capabilities and of control mechanism usage by the business units.

Design/methodology/approach: A survey methodology was applied to collect data among business unit representatives from 91 business units in 19 Dutch organizations. The data were analyzed using structural equation modeling in AMOS.

Findings: This study found that the use of formal control mechanisms (e.g. contracts, service-level agreements) relates negatively with HR shared service value, but that this relationship becomes positive once mediated by informal control mechanisms (e.g. trust and shared language) and operational HR capabilities. Furthermore, it shows that the dynamic capabilities of HR SSCs relate positively to HR shared service value for the business units, but only because of their effect on operational capabilities.

Originality/value: Whereas previous studies into HR SSCs have examined the two antecedents independently, this study shows how organizational control and capabilities interrelate in explaining the value of HR shared services.