This Article Full Text (PDF) References Alert me when this article is cited Alert me if a correction is posted Citation Map Services Email this article to a friend Similar articles in this journal Similar articles in ISI Web of Science Alert me to new issues of the journal Add to Saved Citations Download to citation manager Request Permissions Request Reprints Add to My Marked Citations Citing Articles Citing Articles via HighWire Citing Articles via Google Scholar Google Scholar Articles by Muehlberger, U. Search for Related Content Social Bookmarking                   What's this?

Hierarchical Forms of Outsourcing and the Creation of Dependency

Vienna University of Economics & Business Administration, Austria, Ulrike.Muehlberger{at}wu-wien.ac.at

The focus of this paper is outsourcing activities, where the contracting worker is formally self-employed but the conditions of work are similar to those of employees. It is argued that the outsourced workers are dependent on or integrated into the firm for which they work. We investigate the mechanisms by which firms mix governance structures and give evidence of how these `hierarchical' forms of outsourcing create dependency. The key argument of this paper is that firms have established governance structures based on markets, hierarchies and self-enforcing relational contracts so that they are able to keep a substantial amount of control despite sourcing out of labour. Furthermore, we argue that such hierarchical forms of outsourcing produce dependency. Using empirical evidence of the Austrian insurance industry, it is demonstrated that dependency is created, firstly, by the contractual restriction of alternative uses of resources, secondly, by support measures that bind the worker closely to the outsourcing firm, thirdly, by relationship-specific investments made by the worker and, fourthly, by authority elements.

Key Words: governance structures • relational contracts • hierarchies • outsourcing • dependency

CiteULike    Connotea    Del.icio.us    Digg    Reddit    Technorati    What's this?

This article has been cited by other articles:

				U. Muehlberger and S. Bertolini The organizational governance of work relationships between employment and self-employment Socioecon. Rev., July 1, 2008; 6(3): 449 - 472. [Abstract] [Full Text] [PDF]