How Outsourcing May Enhance Job Satisfaction in the U.S. Federal Bureaucracy: Exploring the Role of Knowledge Sharing
| Author | Shinwoo Lee,Gyeo Reh Lee |
| Date | 01 May 2020 |
| DOI | 10.1177/0275074020913980 |
| Published date | 01 May 2020 |
| Subject Matter | Articles |
research-article2020
Article
American Review of Public Administration
2020, Vol. 50(4-5) 387 –400
How Outsourcing May Enhance Job
© The Author(s) 2020
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Satisfaction in the U.S. Federal
https://doi.org/10.1177/0275074020913980
DOI: 10.1177/0275074020913980
journals.sagepub.com/home/arp
Bureaucracy: Exploring the Role of
Knowledge Sharing
Gyeo Reh Lee1 and Shinwoo Lee2
Abstract
Previous studies reveal that outsourcing practices generally have negative consequences for employee job satisfaction. As
employee job satisfaction is a precursor of employee withdrawal, which is an expensive loss to organizations, it is important
to design appropriate policies and environment to reduce such threats. In particular, scholars and practitioners alike highlight
the importance of learning new knowledge and ideas as the main benefits of government outsourcing. Therefore, this
study develops and tests a model that estimates the effect of government outsourcing on employee job satisfaction at the
organizational level while exploring the possibility that encouraging knowledge sharing among employees in an organization
can result in alleviating the anti-outsourcing sentiment among employees. The findings of this study relying on U.S. federal
agency data from 2010 to 2017 suggest that government outsourcing can improve employee job satisfaction through internal
management practices, such as promoting knowledge sharing among employees.
Keywords
outsourcing, new public management, job satisfaction, knowledge sharing
Introduction
potential negative influence government outsourcing may
bring to employees and how to design appropriate policies
Since the first decade of the 21st century, the level of U.S.
and environment which could reduce such threats. This study,
federal government outsourcing has increased exponen-
therefore, examines the relationship between outsourcing and
tially, which is associated with substantial changes in the
employee job satisfaction, and tries to explore the potential of
government, such as changes in organizational structures,
how government outsourcing can be positively associated
governing values, and cultural outlook (Hood, 1991, 1998).
with job satisfaction. In particular, this research emphasizes
Consequently, the phenomena are very likely to have sig-
that encouraging knowledge sharing among employees in an
nificant effects—both positive and negative—for the public
agency can result in lessening the anti-outsourcing sentiment
workforce (Battaglio, 2009). Although previous outsourcing
among public employees. As highlighted by the recent survey
research has produced abundant evidence of those initia-
of federal managers’ perception on government outsourcing,
tives in terms of societal perspectives with an emphasis on
one of the main benefits for governmental agencies to out-
democracy (e.g., Verkuil, 2007) and organizational perspec-
source their functions or services is “to leverage external
tives with a focus on efficiency and cost savings (e.g., Hood
knowledge and expertise” (Government Business Council,
& Dixon, 2015), the literature has recently begun to address
2015, p. 5). Therefore, if agencies set up the ground to realize
the effects of outsourcing on public sector employees’ work-
this potential benefit, it would be possible to observe different
related attitudes (e.g., Vrangbæk et al., 2015). Indeed, evi-
or positive responses of employees to increasing government
dence suggests that, in the quest for more cost-conscious
outsourcing.
efficiencies and in an attempt to reorder the delivery of pub-
lic services, outsourcing may have contributed to a dissatis-
1Indiana University, Bloomington, USA
fied and less effective public workforce (Vrangbæk et al.,
2Incheon National University, Republic of Korea
2015; Yang & Kassekert, 2010).
Given the fact that increased employee dissatisfaction can
Corresponding Author:
Gyeo Reh Lee, O’Neill School of Public and Environmental Affairs, Indiana
be considered indirect costs to organizations, for example,
University, 1315 E. 10th Street, Bloomington, IN 47405, USA.
employee withdrawal, it is important to be aware of the
Email: gyeolee@iu.edu
388
American Review of Public Administration 50(4-5)
We aim to complement the established outsourcing
sector have revealed a concern for the potential downsides of
research through probing this question. First, this study adds
outsourcing in other critical dimensions, in particular employee
evidence on the effects of government outsourcing on the
work motivation and attitudes (e.g., Diefenbach, 2005; Morley,
public workforce to the limited body of work. Second, with a
2005).
specific focus on knowledge sharing in an agency, this study
Privatization experts have offered various theoretical
tests how outsourcing may improve employees’ job satisfac-
rationales for privatizing or outsourcing public service
tion by exploring moderating effects of organizational condi-
delivery, each one having direct implications for public
tions on the relationship between outsourcing and employee
employees. Economists, including early public choice theo-
job satisfaction. The Federal Employee Viewpoint Survey
rists, have advocated for those practices on the grounds of
(FEVS) enables us to test the moderating effects of knowl-
improvements in efficiency and economy (Downs, 1967;
edge sharing by providing survey items related to federal
Niskanen, 1971). The theorists argue that although public
employees’ perception on job satisfaction and knowledge
managers in a bureaucratic setting may engage in a utility-
sharing. Third, by collecting data at yearly intervals and
maximizing behavior, such as budget maximization and
using panel data methods, this study examines how outsourc-
oversupply of public services, outsourcing offers public
ing affects employee work attitudes over time. As previous
managers greater flexibility in the management of human
studies have been based upon short-term observations,
resources and the delivery of public services. This perspec-
whether or not this effect continues in the long run has been
tive considers public employment a constraint on public
uncertain. As the negative impact of outsourcing may disap-
managers, which can be overcome by replacing full-time
pear if the bureaucracy adjusts itself well (Vrangbæk et al.,
public employees with private contract or temporary work-
2015; Yang & Kassekert, 2010), panel data analyses from
ers. One of the primary goals of market-based reforms is to
multiple data sources, including the Budget of the United
grant public managers more flexibility in hiring and firing
States, the FEVS, FedScope, and the Federal Procurement
workers, which in turn make public sector organizations
Data System (FPDS) from 2010 to 2017, may allow for more
perform better (Davis & Stazyk, 2014). Therefore, public
accurate estimates (Gollob & Reichardt, 1987).
managers in public agencies not only have greater discre-
This study begins with a brief background regarding the
tion, but also have responsibility for the results through flex-
importance of examining outsourcing and its potential out-
ible and decentralized personnel systems (Oh & Park, 2011).
comes. The next section presents theoretical foundations
This is all to underscore that outsourcing by its nature
and hypotheses. The “Method” section explains the sam-
prompts many changes within the organization that directly
pling strategy, data sources, variable measures, and methods
affect the workforce.
used for empirical tests. Then, the results and implications
Notwithstanding, a group of scholars warn that poten-
are discussed, followed by a conclusion, the limitations of
tial negative outcomes of government outsourcing have
this study, and next steps for future studies.
been overlooked (Cooper, 2002; Diefenbach, 2009).
Isabella (1992) conceives of organizational changes as
trigger events that affect employee emotions and attitudes.
Government Outsourcing and Its
In this context, government outsourcing also creates the
Consequences for Employees
conditions which necessitate a consideration of important
problems in public management regarding outsourcing
Privatization phenomena are largely inspired by both market
(Cooper, 2002). Public sector employees experience nega-
ideologies, which promote greater efficiencies and innovations
tive consequences as the public sector increasingly uses
in the public sector, and political ideologies espousing the pub-
market-based reforms or outsourcing as they are expected
lic preference for small government. Under these circum-
to develop business-like, proactive attitudes, if not entre-
stances, outsourcing has become a popular mode of service
preneurial. The comprehensive and meta-analytic research
delivery, which delegates the provision of public goods and
of new public management (NPM) reforms by Diefenbach
services to other organizations (Hodge, 2000). However, the
(2009) provides the negative consequences of those strate-
positive effects of market-based reforms are often limited to a
gies on public organizations and their employees. NPM
few aspects or areas of outcome and most of the research focus
may change the culture and working conditions in public
has...
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