Due to their limited size, many small and medium enterprises (SMEs) cannot justify full-time HR professionals in their organizations. Thus, the complex and time-consuming nature of many HR activities can result in a significant drain on existing managerial resources. Professional employer organizations (PEOs), however, offer SMEs an alternative for handling their workforce by providing compensation programs, regulatory compliance, and other HR-related services. This study examines the satisfaction levels of 763 customers of one large PEO. Results show that firm growth, past HR problems, workforce size, contractual detail, service representative-client relations, value congruence, and overall PEO usage are significantly related to managerial satisfaction with PEO services.
Get full access to this article
View all access options for this article.
References
1.
ArthurD. (1995). Managing human resources in small and mid-size companies.New York: American Management Association.
2.
AxelrodR. (1984). The evolution of cooperation.New York: Basic Books.
3.
BarneyJ. (1991). Firm resources and sustained competitive advantage.Journal of Management, 17, 99–120.
4.
BeamB. T., & McFaddenJ. J. (1992). Employee benefits.Chicago: Dearborn Financial Publishing, Inc.
5.
BlauP. M. (1964). Exchange and power in social life.New York: Wiley.
6.
ConnerK. R., & PrahaladC. K. (1996). A resource-based theory of the firm: Knowledge versus opportunism.Organizational Science, 7, 477–501.
7.
CookM. F. (1999). Outsourcing human resource functions.New York: American Management Association.
8.
DasguptaP. (1988). Trust as a commodity. In GambettaD. (Ed.), Trust: Making and breaking cooperative relations, pp. 49–72. Oxford: Basil Blackwell.
9.
GranovetterM. (1985). Economic action and social structure: The problem of embeddedness.American Journal of Sociology, 91, 481–510.
10.
GreeningD. W., BarringerB. R., & MacyG. A. (1996). Qualitative study of managerial challenges facing small business geographic expansion.Journal of Business Venturing, 11, 233–256.
11.
GreerC. R., YoungbloodS. A., & GrayD. A. (1999). Do the people make the place? The make or buy decision of human resource outsourcing.Academy of Management Executive, 13, 85–95.
12.
GulatiR. (1995). Does familiarity breed trust? The implications of repeated ties for contractual choice in alliances.Academy of Management Journal, 38, 85–112.
13.
JudgeT. A., & CableD. M. (1997). Applicant personality, organizational culture, and organization attraction.Personnel Psychology, 50, 359–394.
14.
KlaasB. S., McClendonJ., & GaineyT. W. (1999). HR outsourcing and its impact: The role of transaction costs.Personnel Psychology, 52, 113–135.
15.
LongeneckerJ. G., MooreC. W., & PettyJ. W. (1994). Small business management: An entrepreneurial emphasis.Cincinnati: Southwestern.
16.
MeglinoB. M., & RavlinE. C. (1989). A work values approach to corporate culture: A field test of the values congruence process and its relationship to individual outcomes.Journal of Applied Psychology, 74, 424–432.
17.
MonteverdeK., & TeeceD. (1982). Supplier switching costs and vertical integration in the automobile industry.Bell Journal of Economics, 13, 206–213.
18.
MulherinJ. H. (1986). Complexity in long term contracts: An analysis of natural gas contractual provisions.Journal of Law, Economics, and Organization, 2, 105–118.
19.
NahapietJ., & GhoshalS. (1998). Social capital, intellectual capital, and the organizational advantage.Academy of Management Review, 23, 242–266.
20.
NAPEO. (1992). The business of employee leasing.Arlington, VA: National Association of Professional Employer Organizations.
21.
NeterJ., WassermanW., & KutnerM. H. (1990). Applied linear statistical models.Burr Ridge, IL: Irwin.
22.
NooteboomB. (1996). Trust, opportunism and governance: A process and control model.Organizational Studies, 17, 985–1010.
23.
PittmanR. (1991). Specific investments, contracts, and opportunism: The evolution of railroad sidetrack agreements.Journal of Law and Economics, 34, 565–589.
24.
RingP. S., & Van de VenA. (1992). Structuring cooperative relationships between organizations.Strategic Management Journal, 13, 483–498.
25.
RobinsonS. L., & RousseauD. M. (1994). Violating the psychological contract: Not the exception but the norm.Journal of Organizational Behavior, 15, 245–259.
26.
WalkerG., & WeberD. (1984). A transaction cost approach to make or buy decisions.Administrative Science Quarterly, 29, 373–391.
27.
WilliamsM. L., & DreherG. F. (1992). Compensation system attributes and applicant pool characteristics.Academy of Management Journal, 35, 571–595.
28.
WilliamsonO. E. (1975). Markets and hierarchies: Analysis and antitrust implications.New York: The Free Press.
29.
WilliamsonO. E. (1979). Transaction-cost economics: The governance of contractual relations.Journal of Law and Economics, 22, 233–261.
30.
WilliamsonO. E. (1996). The mechanisms of governance.New York: Oxford University Press.
