Commitment or contract: what drives performance in public private partnerships?

Purpose – As the practice of outsourcing business activities has become more common than ever, partnerships have increasingly been forged. The aim is to ensure superior performance through organizational relationships characterized by trust and cooperation. Strategic human resource (HR) management highlights the importance of practice for competitive reasons. However, companies' strategic decisions on outsourcing are primarily driven by economic and financial aspirations. As a result, the HR issues fundamental to the effectiveness of the outsourcing practice are often overlooked. Based on a distinctive outsourcing activity involving a public‐private partnership, the purpose of this paper is to reveal how the outsourcing process influences employee commitment and citizenship behavior (willingness to go the extra mile), and to provide insights for strategists, executives and HR managers to enhance their strategic HR practices in line with their outsourcing decisions. Design/methodology/approach – The paper is an embedded case study of a British National Health Service hospital based on quantitative and qualitative data collected from: 101 questionnaires completed by ancillary (non‐clinical) staff employed by the NHS but seconded to a private partner under the ROE (Retention of Employment) model; and 15 semi‐structured interviews with managers and frontline staff. Findings – The findings reveal that: whilst employees developed notably strong emotional attachment to their managing organization their bonds with the employing organization, the hospital, seem to have weakened somewhat; moreover, employee commitment proved to be an effective predicator of citizenship behavior and job performance; and the nature of the contractual relationship, performance management and HR management practices had significant influence on employees' job performance and the private company's ability to meet the performance requirements defined by the NHS. Research limitations/implications – Although based on a unique case of the public‐private partnership, the findings reflect the challenges of strategic HR management in outsourcing in public and private sectors. Practical implications – The findings offer practical insights for company executives, HR managers and policy‐makers. When selecting an outsourcing partner and managing outsourcing activities the structure and nature of the inter‐organizational relationship and the strategic potential of employees and employee management need to be considered. Originality/value – The paper provides first‐hand insights based on viewpoints from employees at different levels who are involved in the NHS outsourcing activities under a partnership arrangement. The findings caution strategists, executives, managers and policy‐makers to re‐visit their outsourcing and HR practices.