Externalizing the Core : explaining firms’ use of employment intermediaries in the information- and communication technology industries

Abstract

Recent research on non-standard employment relations indicates that these arrangements may be a source of innovation and competitive advantage for the firm. In this paper, we analyze firms’ motives for using two types of employment intermediaries (consultancy firms and temporary help agencies) in their core activities. We hypothesize that consultancy firms are used mainly by firms that pursue an innovation strategy or demand special competence, while temporary help agencies are used by firms that compete on low cost or require numerical flexibility. We find empirical support for these hypotheses in a sample of 501 firms in six information and communication industries in Norway. Our results suggest that consultancy firms, rather than temporary help agencies, are the main providers of knowledge and innovation capability from outside organizations’ boundaries.