The Emergence of Shared Service Centers in Multidivisional ...opus.escpeurope.de/opus4/files/34/Dissertation_Philipp_Richter_2018_online.pdfEurope 600 companies 2. In the public sector,

The Emergence of Shared Service Centers in

Multidivisional Corporations

Theoretical considerations and empirical evidence

Inaugural dissertation

submitted to attain the academic degree

doctor rerum politicarum

(Doktor der Wirtschaftswissenschaften)

at the

ESCP Europe Business School Berlin

by

M.Sc., Philipp Clemens Richter

born on 19 December 1988 in Torgau

Berlin

2018

I

Doctoral examination committee

Head: Prof. Dr. Marion Festing

Examiner: Prof. Dr. Rolf Brühl

Examiner: Prof. Dr. Nils Crasselt

Day of disputation: October 16, 2018

I

Table of Contents

Table of Contents ........................................................................................................................ I

List of Figures ........................................................................................................................... II

List of Tables ............................................................................................................................ III

List of Abbreviations ................................................................................................................ IV

1. Introduction ......................................................................................................................... 5

2. Methodological Pathway to Progress Shared Service Research ......................................... 9

3. Definition and Characteristics of Shared Services ............................................................ 12

3.1 Defining Shared Services ............................................................................... 12

3.2 Related Organizational Concepts ................................................................... 14

3.3 Organizational Characteristics of Shared Services ......................................... 16

4. Shared Services in Research – the Past, Present, and Future ............................................ 20

4.1 Introduction to Manuscript 1 .......................................................................... 20

4.2 Manuscript 1 ................................................................................................... 22

4.3 Results and Contribution ................................................................................ 23

5. Theoretical Considerations on the SSC Implementation .................................................. 26

5.1 Conceptualizing the SSC as an Operational Capability ................................. 26

5.2 Conceptualizing the SSC Implementation ...................................................... 27

6. Organizational Antecedents of a Successful SSC Implementation .................................. 28

6.1 Introduction to Manuscript 2 and Manuscript 3 ............................................. 28

6.2 Manuscript 2 ................................................................................................... 31

6.3 Manuscript 3 ................................................................................................... 32

6.4 Towards a Provisional Theory of SSC Implementation ................................. 32

6.5 Empirical Evidence of the Provisional Theory ............................................... 37

7. Conclusion, Limitations, and Future Research ................................................................. 39

References ................................................................................................................................ 42

II

List of Figures

Figure 1: Content and structure of the doctoral thesis .............................................................. 8

Figure 2: Methodological fit as mean of tendency .................................................................. 11

III

List of Tables

Table 1: Organizational characteristics of SSCs .................................................................... 17

Table 2: Organizational antecedents of SSC implementation ............................................... 33

Table 3: Propositions of SSC implementation ....................................................................... 34

IV

List of Abbreviations

CBV Capability-based view

CFO Chief financial officer

CLO Chief learning officer

DAX Deutscher Aktien Index

Ed. Editor

Eds. Editors

et al. et alii (and others)

e.g. exempli gratia (example given)

EM Edmondson & MacManus

ERP Enterprise resource planning

F&A Finance and accounting

H-form Holding organization

HR Human resources

IT Information technology

i.e. id est (that means)

M-form Multidivisional organization

N-form Network organization

p. page(s)

RBV Resource-based view

SBU Strategic business unit

SSC Shared service center

U-form Unitary organization

5

1. Introduction

Companies have exploited much potential to improve the efficiency and effectiveness of their

core business through using a multidivisional organization (M-form) in past decades (Chan-

dler, 1962; Karim, 2006; Teece, Pisano, & Shuen, 1997). Nowadays, companies’ use the

shared service concept as their new mantra to achieve these goals (Janssen & Joha, 2006).

Shared services leverages the resources in firms’ support activities, such as finance and ac-

counting (F&A), human resources (HR), and information technology (IT) and is thus an im-

portant strategy for reducing costs and improving service quality (e.g., Davis, 2005; Gospel &

Sako, 2010; Helper & Sako, 2010). Broadly speaking, a shared service center (SSC) is an or-

ganizational bundle of consolidated and streamlined resources that perform a firm’s value

chain activities, particularly the support activities (Helper & Sako, 2010).

SSCs can differ among each other regarding their organizational characteristics (Aksin

& Masini, 2008). This, in turn, creates enough flexibility to apply an SSC in different types of

organizations. In the private sector, shared service has gained considerable popularity in large,

mainly multinational firms such as in all German DAX 30 companies1 and almost all STOXX

Europe 600 companies2. In the public sector, several examples show that shared services are

of high importance for public companies (e.g., Herbert & Seal, 2012), public institutions like

universities (Miskon, Fielt, Bandara, & Gable, 2013), and public administration (e.g., Raudla

& Tammel, 2015).

The emergence of SSCs has far-reaching implications at different levels of analysis.

At the societal level, shared service is surrounded by considerable controversy because it is

1 I have conducted a Google search to identify the number of DAX 30 companies that have implemented a SSC.

I used the company name and the keyword “shared service” to check whether a firm has a SSC. 2 A Factiva search was conducted and investor relation departments of STOXX Europe 600 companies were

requested to identify the proportion of companies that have implemented a SSC (see also Manuscript 3).

6

perceived as an extensive wave of downsizing of administrative and functional staff, which

additionally reduces the average salary for the remaining staff (Howcroft & Richardson,

2012). At a firm level, much anecdotal evidence especially in practical literature and business

press substantiate the improvement of firms’ financial results through shared services (e.g.,

Barjaktarović, Stefanović, & Đukanović, 2017; Economist Intelligence Unit, 2006; Schulman,

Harmer, Dunleavy, & Lusk, 1999). At the individual level, studies show that shared services

impacts the professional work of functional professions (e.g., bookkeeping and recruiting) and

management positions (e.g., divisional chief financial officers (CFOs) and line managers)

towards more generalist job descriptions (e.g., Redman, Snape, Wass, & Hamilton, 2007).

Against this background, it is surprising that research is in an early developmental

phase whereby scholars’ assert that knowledge of shared service phenomena is generally lim-

ited (e.g., Knol, Janssen, & Sol, 2014). Howcroft and Richardson (2012), for instance, criti-

cize that “despite their expanding presence they are rarely discussed in the academic literature

and there is an absence of in-depth studies” (p. 113). In fact, important topics such as the im-

plementation of SSCs have received little attention in prior literature, and consequently no

theory regarding these phenomena exists.

However, scholars have recently reviewed the success factors in a shared service con-

text; for instance, structural factors of HR SSCs (Bondarouk & Friebe, 2014), stakeholders

and organizational factors to set up IT SSCs (Fielt, Bandara, Miskon, & Gable, 2014), and

motives and decisions to set up public sector SSCs (Paagman, Tate, Furtmueller, & de Bloom,

2015). These articles show that research on shared services is not as rare as perceived by the

research community, but rather they indicate that research findings are highly fragmented

across various disciplines, such as accounting, finance, HR, IT, and public management. Ac-

cordingly, it seems timely to take stock of the SSC literature, to highlight key shortcomings in

this stream of research and provide suggested directions for how the research stream can be

7

advanced in future research. Thus, the first objective of this thesis is to address these themes

(see Manuscript 1), particularly through answering two questions: (1) What we know about

shared services?; and (2) Where we should go in future research?

Furthermore, scholars distinguish the stages of the emergence of SSCs as a continuum

along the maturity phase: from the adoption (preparation) phase to the implementation phase

to the management phase (e.g., Craike & Singh, 2006). Although they acknowledge that our

specific knowledge in each stage is very limited (e.g., Meijerink, Bondarouk, & Lepak, 2016),

recent studies indicate that the implementation phase seems to be the key for success or fail-

ure of the overall SSC emergence in a company (e.g., Harritz, 2018). Specifically, scholars

demonstrate that several organizational, technological, and managerial challenges occur in the

implementation phase, which in turn determine whether the expected outcomes can be

achieved (Janssen & Joha, 2006; Knol et al., 2014). As such, scholars highlight the need for

further research of this phase, and they particularly call for studies that develop a profound

theoretical and empirical foundation for the establishment of SSCs (e.g., Farndale, Paauwe, &

Hoeksema, 2009; Wenderoth, 2013). Accordingly, the second objective of this thesis is to

address the call for more theory-generating works on the SSC implementation (see Manu-

script 2 and 3). This comprises two main questions: (1) What are the antecedents of a success-

ful SSC implementation?; and (2) How do these antecedents relate to implementation suc-

cess?

Taken together, the centerpiece of this thesis is based on three manuscripts (Figure 1).

Each of the manuscripts address relevant yet unexplored topics and therefore advances the

area of shared service research in several ways. Manuscript 1 takes into account that

knowledge of shared services is scattered across the literature, particularly distinct research

disciplines. The manuscript reviews the prior literature to take stock of the existing research

8

directions and to connect knowledge of these directions. The results are used to identify

shortcomings in the nascent stream of research and formulate avenues for future research.

Figure 1: Content and structure of the doctoral thesis

Manuscripts 2 and 3 address the main shortcoming in the SSC research: the lack of a

theoretical and empirical understanding of how SSCs are implemented in a company. Manu-

script 2 uses a meta-synthesis to address these questions through identifying and theorizing

causal relationships between organizational antecedents (i.e., capabilities and resources) and

measures of implementation success. Manuscript 3 builds on these theoretical rationales and

empirically analyzes the influence of organizational capabilities and organizational structure

on SSCs’ implementation success. Accordingly, this thesis theoretically and empirically con-

tributes to developing a SSC implementation theory.

At a level of higher abstraction, this dissertation aims to push forward the field of

shared services from a nascent stage to an intermediate stage of theory research (Edmondson

& McManus, 2007), particularly through following a methodological pathway along research

manuscripts 1–3 (see Section 2). This pathway is an archetypical research process that con-

sists of a sequence of methodological approaches: qualitative approach (Manuscript 1), hybrid

approach (Manuscript 2), and quantitative approach (Manuscript 3).

The remainder of this thesis is structured as follows. The next section outlines the re-

search process that guides this thesis at a higher theoretical level. Here, the process to develop

9

the research stream is introduced. Section 3 concerns the research object of this thesis in more

detail. It starts by defining the terms shared services and SSC. Then, the SSC will be differen-

tiated from related organizational concepts, and important characteristics of SSCs are dis-

cussed as well. Section 4 introduces and presents Manuscript 1 and discusses the results to

shed more light on the first research objective. Afterward, the theoretical considerations and

assumptions of the SSC implementation are presented in the fifths section. Section 6 begins

by introducing and presenting Manuscripts 2 and 3. The theoretical and empirical findings of

both manuscripts are subsequently discussed. Finally, Section 7 provides a brief conclusion of

the thesis, discusses limitations, and suggest opportunities for future research.

2. Methodological Pathway to Progress Shared Service Research

Theory in social science is generally defined as an interrelation of factors that are related in

terms of content (Rudner, 1966; Whetten, 1989). More detailed, Brühl (2017) explains that

theory is a complex system of concepts that are related by means of statements aiming to de-

scribe, understand, and explain phenomena of social reality. To advance or generate a theory

on such a phenomenon, scholars suggest following a sequential procedure (i.e., a systematic

research process; e.g., Giorgi, 1986; Ridder, 2017).

Scholars like Edmondson and McManus (2007) especially consider the progress of re-

search through emphasizing the methodological development in a research area. In this re-

gard, Edmondson and McManus (2007) stress that theory falls along a continuum of three

archetypes: nascent theory, intermediate theory, and mature theory. Nascent theory research is

a very early stage that addresses hitherto little-attracted topics, has been a little-formalized

foundation, or represents relatively unknown phenomena (Edwards, 1998). In this stage of

10

research, little prior work exists, and thus, theoretical contributions are usually made by ob-

serving and describing the practical phenomena in open-ended studies.

By contrast, a “mature theory encompasses precise models, supported by extensive re-

search on a set of related questions in varied settings” (Edmondson & McManus, 2007, p.

1159). Scholars in this stage strongly build on prior literature and make contributions to exist-

ing theory mainly through adding new boundaries, mechanisms, or other specificities.

Intermediate theory research is a transition stage between nascent and mature theory

research (Edwards, 1998; Giorgi, 1986). Research in this burgeoning stage draws partially on

prior works to suggest constructs and/or tentative theoretical relationships between constructs.

Edmondson and McManus (2007) add that scholars integrate quantitative methods in this

stream to conduct preliminary tests on these constructs and relationships. Therefore, research

questions are usually formulated either to generate theoretical propositions or initially to test

theoretical propositions (Eisenhardt, 1989).

As introduced above, studies in the stream of shared services are situated in a nascent

phase because the current state of research in this area is dominated by qualitative research

that observes and describes distinct aspects of the emergence of SSCs (e.g., Lindvall &

Iveroth, 2011). Manuscript 1 will specify that the research stream has an explorative nature,

which usually indicates an early stage of research (Ridder, 2017; Yin, 2013). Moreover, the

majority of studies contribute to research by opening up novel phenomena of shared services

and suggesting further investigations. Accordingly, scholars in this field are faced with the

problems of early stage research, particularly a lack of description regarding the new phe-

nomena and an absence of appropriate theory (Edmondson & McManus, 2007). Therefore,

this thesis aims to advance the SSC research from a nascent to an intermediate stage of re-

11

search, particularly by contributing to generating an organizational theory of SSC implemen-

tation (Manuscripts 2 and 3).

This dissertation follows the research process suggested in the Edmondson and

McManus (EM) framework. Although the EM framework was developed to track the pro-

gress of an entire area of research, scholars advocate that it is also fruitful to guide research

regarding a specific phenomenon (e.g., Carrington, Neville, & Whitwell, 2014). This frame-

work proposes that theory research is progressing with the research designs used to answer

the questions in a research field. More specifically, it is attributed that a nascent stage is char-

acterized by qualitative designs, an intermediate stage by hybrid designs, including both

qualitative and quantitative methods, and finally a mature stage dominated by quantitative

designs. Therefore, theory research evolves through the sequence of the methodological de-

signs used by scholars in this stream. This conceptual relationship between the maturity of

theory research and research design (i.e., the methodological fit) is presented in Figure 2. The

archetypical pathway is positioned along the diagonal.

Figure 2: Methodological fit as mean of tendency (cf. Edmondson & McManus, 2007)

The progress of theory research is indeed far more complex than proposed in the EM

framework because research may also benefit through other combinations presented in Figure

12

2. For example, scholars could use a qualitative design in the mature stage, particularly to

explore novel antecedents that affect a phenomenon. However, although the EM framework is

not generalizable to all research areas, it builds a suitable conceptual pathway to track the

evolvement of a research stage by focusing on an important element—the methodology.

More specifically, Manuscript 1 uses a qualitative approach to review the literature

and propose important directions for future research in the SSC stream. Manuscript 2 follows

one of these suggestions and theorizes the setup of SSCs by using a meta-synthesis approach.

This approach is in fact qualitative in nature but it translates the evidence in qualitative stud-

ies into quantitative variable relationships and has therefore a hybrid character (Hoon, 2013).

Manuscript 3 takes these results into account and conducts a quantitative study to empirically

test the effects of organizational antecedents on the implementation success of SSCs. It is ar-

gued that this thesis pushes forward the research stage in this area because the three manu-

scripts follow this pathway.

3. Definition and Characteristics of Shared Services

Before reviewing the literature of the shared service domain and developing an agenda for

future research, it is necessary to shed more light on the object of investigation. In this con-

text, it is important to provide a sound definition of the concept of shared services and its or-

ganizational form—the SSC. This section also explains how the SSC concept differs from

related organizational concepts, specifically the M-form and outsourcing, and gives an over-

view of an SSC’s organizational characteristics.

3.1 Defining Shared Services

Shared service is frequently considered as a collaborative strategic means that leverages or-

ganizational resources (Aksin & Masini, 2008; Soalheira & Timbrell, 2014). Management

13

scholars have used the shared services concept for several decades but mainly refer to an in-

ter-organizational context, particularly an inter-firm cooperation such as alliances and joint

ventures (e.g., Frost, Birkinshaw, & Ensign, 2002). This thesis concerns the use of shared

service as a strategy of intra-firm cooperation between business units of a firm (Bergeron,

2003).

The organizational form of shared services is an SSC. The SSC is an organizational

concept that bundles and manages specific firm resources and deploys these resources to de-

liver services to multiple customer units, typically strategic business units (SBUs; Gospel &

Sako, 2010; Schulman et al., 1999; Ulbrich, 2009). This definition includes three features that

need further explanation.

First, SSCs are bundles of organizational resources, such as organizational structure of

support activities and human capital (see Section 3.3). That is, a SSC can take a variety of

manifestations, which, in turn, depend on “the ‘needs’ arising from the environment in which

a company operates” (Aksin & Masini, 2008, p. 239). Second, SSCs are considered as re-

sponsibility centers because they take responsibility to manage these organizational resources

on a company-wide basis (Helper & Sako, 2010). For example, Herbert and Seal (2014) re-

ported about a SSC that bundles the organizational knowledge to manage all engineering pro-

jects in the firm. Third, SSCs employ the resources at their disposal to provide services. This

means that the SSC “respond[s] to its customers’ requirements in terms of day-to-day opera-

tions and concern the extent to which the SSC is able to provide the services repeatedly by

using its current resource base” (Bondarouk & Maatman, 2014, p. 156).

At an activity level of analysis, the SSC concept helps a firm to decouple its value

chain, particularly through altering the support activities. Porter’s (1985) classical activity-

based concept builds frequently the starting point to capture the subject of interest: support

14

activities. He decomposes corporate functions in core activities and support activities. Propo-

nents of this concept argue that core activities are the sources to create products or services

and therefore add value, whereas support activities provide the infrastructure for production

and therefore destroy value (Prahalad & Hamel, 1990). Firms decide on the basis of their spe-

cific situation, whether an activity is core or support in nature (Goold, Pettifer, & Young,

2001). For instance, sales activities are usually assigned to core activities because they direct-

ly create value for the firm, whereas activities in accounting (e.g., general ledger), finance

(e.g., accounts payable), or human resources (e.g., payroll) are categorized as support activi-

ties (Smith, Morris, & Ezzamel, 2005).

3.2 Related Organizational Concepts

Historically, several concepts are developed to organize firms’ business resources. Classical

organizational literature, for instance, discusses concepts such as the H-form (holding) organ-

ization and U-form (unitary) organization (Gospel & Sako, 2010). Both types are character-

ized through a strong centralization of support activities in specific units at the headquarter

level and decentralization of the core activities (Armour & Teece, 1978). Moreover, scholars

of the international business area proposed the N-form (network) organization in which re-

gional support service centers are used to coordinate a firm’s support activities (Ghoshal &

Bartlett, 1990). In sum, several organizational concepts have been established to coordinate

and control a company’s business.

However, the M-form is acknowledged as the most important concept in corporations,

particularly those with an international orientation (Gospel & Sako, 2010). The M-form em-

powers decentralized SBUs (divisions) to take responsibility of a market, product, or service

(Chandler, 1962). That is, each SBU is responsible for specific business activities such as

manufacturing and sales and has therefore responsibility for the resources needed to perform

15

the activity. The M-form creates a close relationship between SBUs and the company’s cus-

tomers and is therefore able to answer on fast market changes (Teece, 2007). From a support

activity perspective, however, it creates similar work and resources in each SBU and thus

establishes much duplications in a company accompanied by additional costs (Herbert & Seal,

2012). Hence, companies move their support activities from a multidivisional organization

toward an organization in shared services, or they externalize such activities to strategic part-

ners by using outsourcing (Gospel & Sako, 2010).

Outsourcing is the transfer of an activity from a company to an external vendor, usual-

ly in another geographic location, whereas shared services take place within the corporation

(McCracken & McIvor, 2012). From a business unit perspective, however, the transfer of ac-

tivities from an SBU to the SSC (i.e., two distinct legal parties) is considered as outsourcing.

Therefore, shared services are considered by some managers as internal outsourcing or in-

sourcing (Lacity, Willcocks, & Rottman, 2008). In that regard, it should be noted that

“[s]hared service organizations are seen by some as the step taken before outsourcing, and by

others as the alternative to corporate outsourcing” (Aksin & Masini, 2008, p. 240). That is,

sometimes firms establish an SSC and subsequently outsource the entire center to a vendor

(e.g., McCracken & McIvor, 2012).

Taken together, companies use mainly three organizational concepts to coordinate

their support activities: the M-form, outsourcing, and shared services. Whereas the conven-

tional M-form was the dominant concept up to the 1980s, outsourcing and particularly shared

services are now predominant in corporations (Davis, 2005). Managers specifically attribute

this to the fact that shared service is the concept providing the most substantial enhancement

of firms’ business performance (Bergeron, 2003; Quinn, Cooke, & Kris, 1999). However,

although shared service has been announced as a superior organizational concept, research

still lacks reliable comparison of performance implications between the concepts.

16

3.3 Organizational Characteristics of Shared Services

Previous scholars indicate that some firms have a more effective SSC than others (e.g.,

Janssen, Joha, & Zuurmond, 2009; Schulz & Brenner, 2010). In that regard, Steven Kerr the

former chief learning officer (CLO) at General Electric has explained that “[s]hared services,

like outsourcing, is not a panacea for all functions. Sometimes it works and sometimes it is

not the right strategy” (Quinn et al., 1999, p. 53). Aksin and Masini (2008) explain that such

differences in effectiveness occur because some manifestations (i.e., organizational character-

istics) of an SSC do not fit with the actual needs of the company. This background raises an

important question: What are the organizational characteristics that shape a SSC?

Research has started to answer this question in several ways. Aksin and Masini

(2008), for instance, have used a contingency approach to derive some characteristics from

theory. Then, they conducted an explorative analysis in which they clustered several organiza-

tional resources, particularly structural variables and IT infrastructure. By doing so, they de-

veloped four archetypical SSC configurations: cost-watchers, business-minded optimizer,

focus adopter, and immature service provider. Other studies have used qualitative approaches

to uncover organizational characteristics. Schulz, Hochstein, Uebernickel, and Brenner

(2009), for example, have conducted a serial of expert interviews to figure out the characteris-

tics of IT SSCs. Their results show, among others, that variables such as the outward-

orientation and internationality of a SSC are important. Moreover, Meijerink and Bondarouk

(2013) have examined archival and interview data of Dutch organizations and found that

SSCs are characterized through the extent of human capital and IT infrastructure. Altogether,

several studies suggest an extensive set of organizational characteristics (see Table 1). Next,

the main characteristics will be briefly discussed.

17

Table 1: Organizational characteristics of SSCs

Organizational

characteristics Variable Description

Organizational

structure

Centralization The degree of centralization of decision-making power on

support activities.

Output standardization The extent to which support services are specified.

Formalization of work

The extent to which firms prescribe employees’ behavior to

perform support activities, particularly through written rules

and procedures.

Business model Outward-orientation The extent of services that are offered to customers outside the

firm.

Internationality Geographical distance The average of the distances in kilometers between a SSC and

its customer sites.

Human capital Human capital The extent of employees’ knowledge and their social as well

as personal abilities to perform an activity.

Technology IT infrastructure The extent of a firm’s business units that use the same IT

resources.

Studies indicate that an important characteristic of an SSC is the organizational struc-

ture. In general, organizational structure is the fundamental way with which an organization

coordinates and monitors their work (Mintzberg, 1979). Specifically, the organizational struc-

ture of firms’ support activities is concerned in an SSC context. Studies highlight three struc-

tural variables: the degree of centralization of decision-making power, degree of output

standardization, and degree of formalization of work (e.g., Howcroft & Richardson, 2012;

Kastberg, 2016; Lindvall & Iveroth, 2011). These variables determine how the SSC manages

its functional staff and performs the services that are delivered to customers. Therefore, or-

ganizational structure is a key antecedent of the efficiency of support activities. Because the

fact that these variables occur always in a combination, they are considered in bundle and will

be called mechanistic organizational structure in this thesis. That is, a high manifestation of

the variables indicates a high degree of mechanistic structure and a low manifestation indi-

cates a low degree of mechanistic structure in a firm’s support activity.

18

The business model of a SSC is characterized through the degree of outward-

orientation (Aksin & Masini, 2008). Outward-orientation is the extent to which services are

delivered to external customers (Schulz, Herz, Rothenberger, & Brenner, 2010) and therefore

determines whether the SSC focuses merely on cost-cutting (i.e., cost center) or also on profit

generation (i.e., profit or investment center; Aksin & Masini, 2008). Firms can benefit from a

strong outward-orientation because it enables access to external resources and the ability to

generate profits can legitimate the entire SSC project within a firm (Boglind, Hällstén, & Thi-

lander, 2011).

The internationality of support activities is another important characteristic, particular-

ly for SSCs in multinational firms (Schulman et al., 1999). Internationality addresses the

question of where to locate the SSC and is therefore the geographical distance between SSC

and its customers (e.g., Maatman, Bondarouk, & Looise, 2010; Pritchett, 2018). The geo-

graphical distance can be seen as proxy for several distances between the SSC and its custom-

ers, such as cultural, linguistic, and spatial distances (Boglind et al., 2011).

Furthermore, scholars characterize SSCs according to the degree of human capital re-

quired to fulfill its responsibility. Studies use this variable rather implicitly to differentiate

SSCs because a more common discrimination is between transaction-oriented SSCs (center of

scale) and knowledge-oriented SSCs (center of excellence; e.g., Redman et al., 2007). It is

supposed that the responsibility of centers of scale is to operate day-to-day activities, whereas

centers of excellence are also responsible to leverage best practice and disseminate knowledge

across the firm (Frost et al., 2002). In line with this argument, scholars attribute that centers of

scale require a low degree of human capital because they perform merely routinized activities,

whereas a high degree of human capital is attributed to centers of excellence because it is

needed to build and distribute best practices (Meijerink & Bondarouk, 2013).

19

More recently, however, scholars challenge this differentiation because several exam-

ples show that SSCs are getting more in charge of knowledge-based activities such as ac-

countancy and internal audit (e.g., Brühl et al., 2017; Herbert & Seal, 2014). This argument

can be supported through survey data collected in Manuscript 3.3 More specifically, SSCs’

top managers were requested to assess the extent of transactional-based and expertise-based

activities included in their SSC. The results show an average value of 57.4 %, which indicates

a tendency that SSCs are responsible for some knowledge-intense activities and therefore

need a certain degree of human capital.

Finally, several studies show that the degree of IT infrastructure characterizes the or-

ganizational shape of an SSC. More generally, in the M-form organization has historically

grown a fragmentation of IT resources such as enterprise resource planning (ERP) systems

and marketing information systems (Aksin & Masini, 2008). Along the setup of a SSC, firms

introduce new IT resources—in the best case only one IT resource—that should be used by all

business units (e.g., Goh, Prakash, & Yeo, 2007; Lindvall & Iveroth, 2011).

In summary, the definition and characterization makes clear that SSCs are a complex

phenomenon. Therefore, this first part of the thesis has outlined a comprehensive picture re-

garding SSCs. This understanding is important because it builds the foundation for the subse-

quent analysis of SSC research and the development of an SSC implementation theory.

3 Managers were asked “[p]lease indicate the relation of transactional and expertise-based activities in your SSC”

on a scale from 0 – “only transactional activities” to 100 – “only expertise-based activities.”

20

4. Shared Services in Research – the Past, Present, and Future

4.1 Introduction to Manuscript 1

Manuscript 1 investigates literature in the area of shared services. While scholars of shared

service research generally criticize the limited attention paid to it in academic research (e.g.

Farndale et al., 2009), this study challenges this argument and systematically organizes early

and recent knowledge in this field of research. That is, the manuscript identifies and synthe-

sizes the research directions of shared service research (i.e., content) and characterizes the

literature in terms of methodology and theories used. More generally, Manuscript 1 delivers a

state-of-the-art perspective on previous shared service research by answering the questions of

the first objective: (1) What we know on shared services?; and (2) Where we should go in

future research.

The manuscript uses a systematic approach to review and classify research objectives

in existing literature. First, the study follows Jiang and Qureshi’s (2006) framework to catego-

rize the research objectives into four perspectives: determinant-oriented (i.e., research that

explores particular factors), process-oriented (i.e., research that examines business processes

and structures of SSCs), control-oriented (i.e., research that studies governance and control

mechanisms), and outcome-oriented (i.e., research that investigates the financial and nonfi-

nancial consequences of an SSC). Second, similar research objectives within the categories

are aggregated to identify the major research areas in each of the four perspectives.

Altogether, prior research on shared services is dominated by a qualitative-explorative

paradigm, which is often accompanied by a comprehensive set of research objectives in a sin-

gle work. Therefore, the two-step approach in Manuscript 1 seems well-suited to collate the

research directions of highly fragmented works and particularly to answer research question

1. Through the results of this review, the study is able to identify shortcomings in the research

21

stream, emphasize opportunities for future research, and make suggestions for methodological

approaches (research question 2). In summary, Manuscript 1 advances the research by con-

necting existing literature under a conceptual “umbrella” and makes therefore an important

step for using the scattered knowledge of this nascent field of research.

22

4.2 Manuscript 1

Manuscript 1

Title: Shared service center research: A review of the past, present, and future

Authors: Philipp Richter and Rolf Brühl

Status: Published (European Management Journal)

DOI (manuscript): https://doi.org/10.1016/j.emj.2016.08.004

Journal Ranking: B (VHB-JOURQUAL 3)

Manuscript available from the author upon request.

23

4.3 Results and Contribution

Manuscript 1 provides a review of previous shared service literature, particularly the content

and characteristics of prior works. A comprehensive literature search yielded a list of 137 arti-

cles; after eliminating all non-peer-reviewed articles, the study counted a final sample of 83

academic articles. This finding rejects the widespread argument that SSC research has re-

ceived scant attention (e.g., Amiruddin, Aman, Auzair, Hamzah, & Maelah, 2013; Howcroft

& Richardson, 2012), but rather shows that the research community is spread across distinct

disciplines. Moreover, the manuscript shows that the overwhelming majority of academic

articles (88%) have used a qualitative-explorative research design to develop descriptive in-

formation on the research objective.

To answer the first research question (what we know on shared services), the manu-

script reveals that the majority of prior studies explored distinct factors in the SSC context

(i.e., areas in the determinant-oriented perspective). For example, scholars investigated the

motives that drive an SSC implementation (e.g., Janssen & Joha, 2006; Paagman et al., 2015),

critical success factors that are needed to successfully implement and/or manage SSCs (e.g.,

McIvor, McCracken, & McHugh, 2011; Ulbrich & Schulz, 2014), and distinct organizational

characteristics that shape SSC configurations (e.g., Schulz & Brenner, 2010). In particular, the

review of motives for the implementation revealed that scholars identified the primary reasons

for shared services: improvement of economic performance.

A quarter of prior studies (in the process-oriented perspective) has examined the im-

plementation patterns, change management approaches applied to set up an SSC (e.g., Day &

Norris, 2006; Ulbrich, 2010), and process and organizational designs of an SSC (e.g., Janssen,

Joha, & Weerakkody, 2007). Moreover, approximately 16 % of research objectives (in the

control-oriented perspective) have explored the governance structures and coordination mech-

24

anisms in an SSC, as well as the management of governance structures (e.g., Janssen & Wa-

genaar, 2004; McCracken & McIvor, 2012). Finally, although we found that the improvement

of economic performance is a key motive to implement an SSC, the manuscript shows that

research on performance implications through using an SSC is still limited (i.e., areas in the

outcome-oriented perspective). This reveals a key shortcoming in this stream of research: a

lack of knowledge on whether the SSC is actually able to enhance firm performance.

Addressing the second research question (where we should go in future research), a

conceptual framework was created to organize distinct research opportunities around three

avenues. First, the manuscript shows that prior studies have explored many antecedents (such

as institutional and organizational factors and decisions) for successful implementation and

management of SSCs. The manuscript takes this into account and suggests synthesizing these

antecedents, e.g. through qualitative synthesis or a factor analysis, and examining their influ-

ence in implementation and/or management success of an SSC. This avenue is highly promis-

ing for future research because it is highlighted by several scholars but almost completely

neglected in recent research (e.g., Harritz, 2018; Lindvall & Iveroth, 2011).

Second, the literature review has revealed limited knowledge on performance out-

comes that result though an SSC. The second direction proposes to investigate these outcome

effects, particularly through more research on the types of SSC outcomes (i.e., individual-

level consequences for employees and organizational performance consequences for the firm).

Also, the manuscript proposes a focus on the management (post-implementation) phase to

examine financial and non-financial performance implications (profitability and service quali-

ty) of SSCs. Methodologically, scholars could use event study designs or multivariate anal-

yses. This would deliver a first impression on how well or poorly SSCs actually perform and

also provide a basis to assess whether SSCs perform better than conventional concepts. Spe-

25

cifically, research that compares distinct organizational concepts would advance the literature

presented in Section 3.2.

The third direction focuses on coordination and configuration issues in an SSC con-

text. Specifically, several opportunities emphasize the use of configurational research. For

instance, the manuscript suggested exploring the organizational configurations of an SSC,

testing performance differences between these configurations, and investigating changes of

configurations along as time passed. Methodologically, scholars could build on a broad range

of approaches such as cluster analysis, survey research, and case studies for these investiga-

tions. These opportunities would add to the literature stream presented in Section 3.3 and par-

ticularly open up a promising direction to incorporating more configurational research in SSC

literature.

Furthermore, another opportunity of the third direction is to investigate the interrela-

tion between coordination mechanisms and SSC configuration. This seems auspicious be-

cause scholars found, on the one hand, that coordination mechanisms shape SSC configura-

tion (Aksin & Masini, 2008); on the other hand, scholars explored how SSC configuration

determines coordination mechanisms (Amiruddin et al., 2013). Therefore, these contradictory

findings need further clarification.

More generally, scholars usually do not generate theories from scratch, but rather fol-

low a research process to continuously improve theoretical knowledge in a research area

(Whetten, 1989). Manuscript 1 starts this process through connecting distinct streams in lit-

erature regarding the overall theme of shared services. At a higher level of abstraction, Manu-

script 1 has a twofold character, which in turn determines the contributions of this article.

First, the manuscript is descriptive in nature because it sheds some light on previous research

objectives and links them with each other. Therefore, it is well-suited to reveal shortcomings

26

in prior research. Second, the article is conceptual because it uses a framework to guide re-

search directions for future studies and also suggest methodological opportunities.

5. Theoretical Considerations on the SSC Implementation

This section examines the second research objective in this thesis. Before Manuscripts 2 and 3

are introduced in subsequent sections, the theoretical considerations and assumptions of the

SSC implementation will be briefly explained.

5.1 Conceptualizing the SSC as an Operational Capability

This thesis builds on considerations from competitive advantage literature, which originates in

the resource-based view (RBV). The RBV sheds light on how companies’ organizational re-

sources can lead to competitive success (Barney, 1991). The RBV considers an organization

as a heterogeneous bundle of tangible and intangible resources, such as physical assets, hu-

man assets, knowledge, and structures (Priem & Butler, 2001). Early RBV theorists have

specified that some of these bundles have the potential to create a real competitive benefit

(e.g., Barney, 1991). However, later scholars have emphasized that the firm should have the

ability to operate and exploit these resource bundles (Sirmon, Hitt, & Ireland, 2007). This line

of thought is rooted in the capability-based view (CBV), a successor of the RBV.

According to the CBV, a firm has operational capabilities that are used to enable the

firm to “make a living” (Winter, 2003). Collis (1994, p. 145) explains more specifically that

an operational capability “reflect[s] an ability to perform the basic functional activities of the

firm, such as plant layout, distribution logistics, and marketing campaigns, more efficiently

than competitors.” By building on this argument, this thesis proposes that an SSC is a firm’s

operational capability to perform its support activities. In line with the SSC’s definition, it is

particularly the means with which the firm bundles support activity-related resources. There-

27

fore, the organizational characteristics of an SSC determine how efficiently and effectively

the firm can deploy their support activities (Maatman et al., 2010).

As previously explained, firms sometimes decide to outsource their SSCs, which

would imply that these firms sell their operational capabilities to external vendors. However,

Teece (2014) has explained that firms do not necessarily own these operational capabilities as

long as they can access them. That is, in turn, the SSC as an operational capability can create

a more permeable boundary of the firm. Prior studies argue that this characteristic leads to

more flexibility, which results in a higher service quality at lower costs than firms’ competi-

tors (e.g., Schulman et al., 1999). It is therefore argued that firms with strong operational ca-

pabilities through an SSC can improve their competitive situations.

5.2 Conceptualizing the SSC Implementation

According to Aksin and Masini (2008, p. 239), firms can build an SSC through using “the

specific capabilities developed” in a firm. This argument takes into account that a firm has

capabilities that create an altered resource base to be more competitive (Eisenhardt & Martin,

2000). The present thesis follows this thought to conceptualize how an SSC becomes a firm’s

operational capability specifically, that a firm’s internal capabilities are an important anteced-

ent for a successful SSC implementation (Gospel & Sako, 2010).

More specifically, the CBV of a firm establishes a distinction between two categories

of capabilities: operational capabilities and organizational capabilities (Karna, Richter, & Rie-

senkampff, 2016). Scholars argue that a company has organizational capabilities to create,

extent, and modify its resource base (Helfat et al., 2007; Teece et al., 1997). Organizational

capabilities help to purposefully alter particular resource configurations and also to build new

resources within a firm (Teece, 2007). Resource alteration is usually a reaction to changes in

the firm’s internal and external environment (Eisenhardt & Martin, 2000; Sirmon et al.,

28

2007), such as institutional pressure through an industry-wide cost cutting initiative (Teece et

al., 1997). Furthermore, it can be a proactive reaction to awake new market opportunities (Ei-

senhardt & Martin, 2000). According to Teece (2007), organizational capabilities build a triad

because they enable a firm to sense opportunities and threats, seize resources and investments,

and ultimately change its resource base.

In this line of thought, the implementation of an SSC is the renewal, modification, de-

letion, and/or reduction of firms’ resources, particularly those that are needed to perform sup-

port activities (Campbell, Whitehead, Alexander, & Goold, 2015; Sako, 2010). For example,

the global chemical company BASF has altered its human resources and IT resources related

to F&A activity from an organization in 220 SBUs into three global SSCs, which deliver fi-

nance, accounting, and payroll services on a company-wide basis (M2 PressWire, 2014; PR

Newswire U.S., 2014). Therefore, this thesis concerns the SSC implementation as a restructu-

ration of support activity-related resources from a multidivisional organization towards a sin-

gle divisional organization—the SSC (Gospel & Sako, 2010).

6. Organizational Antecedents of a Successful SSC Implementation

6.1 Introduction to Manuscript 2 and Manuscript 3

Manuscript 1 has opened up important avenues that would bring the shared service literature

forward, including the antecedents to set up an SSC. Manuscript 2 is a theory-building study

that identifies important organizational antecedents and proposes how they impact the imple-

mentation success of an SSC. Manuscript 3 uses these theoretical insights and empirically

tests a sub-model suggested in the second manuscript.

More generally, success of the introduction of shared services is often anecdotally re-

ported in literature (e.g., Barjaktarović et al., 2017; Cecil, 2000; Forst, 2001; Kleinfeld, Kro-

29

nau, & Holtje, 2005; Shah, 1998), but it usually remains unclear which antecedents lead to

successful SSC implementation, and how (Richter & Brühl, 2017). Scholars have recently

started to describe the SSC implementation by conducting explorative single and multi-case

studies (e.g., Gospel & Sako, 2010; Seal & Herbert, 2013), so there is a great deal of infor-

mation regarding SSC implementation in previous literature. However, little aggregation of

this evidence from primary cases has been done so far (Gospel & Sako, 2010; Meijerink,

Bondarouk, & Maatman, 2013). Against this background, Manuscript 2 aims to theorize about

SSC implementation by aggregating the qualitative case study evidence.

More specifically, the manuscript uses a meta-synthesis procedure suggested by Hoon

(2013). The meta-synthesis is an “exploratory, inductive research design to synthesize prima-

ry qualitative case studies for the purpose of making contributions beyond those achieved in

the original studies” (Hoon, 2013, p. 523). This procedure constitutes an interpretive approach

with which scholars aggregate qualitative information to build theory. Overall, Manuscript 2

advances the literature by closing a theoretical shortcoming in shared service research: the

lack of theory on SSC implementation.

Furthermore, Manuscript 3 examines whether the theoretical relationships suggested

in Manuscript 2 holds up in an empirical context. More specifically, the manuscript uses sur-

vey data to test the effects of antecedents (organizational capabilities and organizational struc-

ture) on the success of SSC implementation, defined as improvement of firm performance.

Manuscript 3 conceptualizes success as a second-order construct, thereby defining first-order

constructs as the improvement of a firm’s operational and organizational performance.

This manuscript hypothesizes that organizational capabilities (i.e., reshaping capabil-

ity and IT capability) positively relate to SSCs’ implementation success, and argues that the

renewed organizational structure mediates this direct relationship. Data were collected with an

30

online questionnaire from managing directors in F&A SSCs, all of whom in listed companies

from the STOXX Europe 600 index. The sample in this manuscript comprises 164 cases and

was analyzed with partial least square structural equation modeling (PLS-SEM).

So far, empirical studies that investigate antecedents for success are still limited, but

some research exists that investigates factors for successfully managing SSCs. For instance,

Aksin and Masini (2008) used regression analysis to study how distinct SSC configurations

affect the performance of a firm. Moreover, Maatman and Meijerink (2017) used structural

equation modeling to examine the effects of formal and informal control mechanisms on the

service value for HR SSCs. However, to the best of our knowledge, the shared service stream

generally lacks studies that empirically examine antecedents for implementation success.

Hence, Manuscript 3 addresses this shortcoming and provides empirical evidence on how

organizational capabilities and organizational structure leads to SSCs’ implementation suc-

cess. In sum, Manuscripts 2 and 3 make an important step to build an implementation theory

for SSCs.

31

6.2 Manuscript 2

Manuscript 2

Title: Implementing Shared Service Centers in Multidivisional Organizations:

A Meta-Synthesis Study

Authors: Philipp Richter and Rolf Brühl

Status: Passed desk reject (Journal of World Business)

Journal Ranking: B (VHB-JOURQUAL 3)

Manuscript available from the author upon request.

32

6.3 Manuscript 3

Manuscript 2

Title: Ahead of the game: Antecedents for the success of shared service centers

Authors: Philipp Richter and Rolf Brühl (corresponding author)

Status: Passed desk reject (Journal of Accounting and Organizational Change)

Journal Ranking: B (VHB-JOURQUAL 3)

Manuscript available from the author upon request.

33

6.4 Towards a Provisional Theory of SSC Implementation

The second research objective of this thesis aims to shed more light on a largely neglected theme:

SSC implementation. Manuscript 2 starts to addresses this shortcoming through descriptive in-

formation from prior case studies in a meta-synthesis procedure. Specifically, it theorizes on SSC

implementation at an organizational level of analysis because the majority of primary case

studies (data sources of this manuscript) address this level.

The meta-synthesis answers the first research question, namely which antecedents

contribute to implementation success. The results show the following five organizational an-

tecedents: reshaping capability, organizational member support, mechanistic structure, IT

infrastructure, and organizational trust. Moreover, implementation success is manifested

through two variables: efficiency of support services, and organizational performance. Addi-

tionally, the study reveals one boundary condition: firm size. Table 2 gives a brief overview.

Table 2: Organizational antecedents of SSC implementation

Variables Description

Reshaping capability Reshaping capability is defined as multidimensional capability that enables an

organization to initiate and successfully achieve changes.

Organizational mem-

ber support

(mediator)

Organizational member support is the degree to which affected employees have a

positive view on the alteration of support activity.

Mechanistic structure

Mechanistic structure is the second-level construct of a support activity’s organiza-

tional structure. A mechanistic structure is composed of the degree of centraliza-

tion, standardization of outputs, and formalization of work.

IT infrastructure IT infrastructure is the degree to which the firm uses new, common IT resources

across the firm, such as enterprise resource planning (ERP) systems or HR infor-

mation systems.

Organizational trust

(affected variable/

moderator)

Organizational trust is defined as an expectation held by internal customers (i.e.,

SBUs and headquarters) that the SSC will behave in a mutually acceptable manner.

Implementation

success

Success is composed of the efficiency of support activities and the organizational

performance.

Firm size

(moderator)

Firm size is the size of the company measured in terms of revenue or number of

employee.

34

These findings support the importance of two SSC characteristics: organizational

structure and technology (see Section 3.3). Moreover, they add to our knowledge on the or-

ganizational characteristics of SSCs through introducing the organizational trust variable, par-

ticularly for the SSC-customer relationship. In this vein, trust is important for the network that

the SSC builds with its customers, and therefore can be seen as social capital at a theoretical

level. Social capital is defined as the “goodwill that is engendered by the fabric of social rela-

tions and that can be mobilized to facilitate action” (Adler & Kwon, 2002, p. 17). More gen-

erally, our finding indicates that SSCs could also be classified through a further organizational

characteristic: the degree of social capital.

Table 3: Propositions of SSC implementation

Propositions

P1 A positive influence of the reshaping capability on the degree of mechanistic structure in firms’

support activity is mediated by the degree of organizational member support.

P2 A positive influence of the reshaping capability on the degree of IT infrastructure in firms’ support

activity is mediated by the degree of organizational member support.

P3 A positive influence of a firm’s reshaping capability on the level of organizational trust between

SSCs and their customers is mediated by the degree of organizational member support.

P4 The degree of mechanistic structure has an inverted, U-shaped influence on the level of organiza-

tional trust between SSCs and their customers.

P5a The degree of mechanistic structure in firms’ support activities positively relates to the efficiency of

the support activities.

P5b The positive relationship between the degree of mechanistic structure and efficiency in support

activities is higher in large firms than in small firms.

P5c

The positive relationship between the degree of mechanistic structure and efficiency in support

activities is higher with a high level of organizational trust in the SSC–customer relationship than a

low level of trust.

P6a The degree of IT infrastructure used to operate firms’ support activities positively relates to the

efficiency of support activities.

P6b The positive relationship between the degree of IT infrastructure and the efficiency of support activ-

ities is higher in large firms than in small firms.

P7 The more efficiently a firm can operate its support activities, the higher the firm’s organizational

performance will be.

35

Furthermore, the meta-synthesis allows theorizing on the interactions between the var-

iables and thus answering the second question: how do antecedents relate to implementation

success? On this basis, a set of propositions is suggested regarding the direction of influence

(see Table 3 for an overview). A key result is that the strength of a firm’s reshaping capability

positively affects the degree of mechanistic structure, the degree of IT infrastructure, and the

level of organizational trust. This analysis particularly reveals that organizational member

support is a mediating variable for these direct relationships (P1-P3).

It is important to note that the proposed association between the mechanistic organiza-

tional structure and the level of organizational trust is an inverted U-shape relationship (P4): a

higher degree of mechanistic structure can reduce uncertainties in the SSC-customer relation-

ship, but a too a strong mechanistic structure elicits a high degree of distance between the

parties, which results in a lower level of trust.

A direct relationship between mechanistic structure and efficiency of support activities

is also conditioned through the level of organizational trust (P5c). It is particularly argued that

the strength of the relationship is higher when a high level of trust exists, rather than in cases

of low levels of organizational trust. Importantly, although we suggest a positive association

of the mechanistic structure and efficiency of support activities, a too-high degree of mecha-

nistic structure can adversely affect the level of trust and therefore leads to a situation in

which the direct structure-efficiency relationship is rather weak.

Overall, these results have two implications. Theoretically, we are the first to describe

and explain the previously neglected relationship between mechanistic structure, organiza-

tional trust, and implementation success. Managerially, we could show that high degree of

mechanistic structure is not always better. Practitioners can take our results into account to

understand the complex interaction between these variables and can more carefully react

36

when setting up a new SSC. Specifically, a more nuanced view on the degree of mechanistic

structure is recommended: the extremes of a very high degree or very low degree of mecha-

nistic structure should be avoided.

Manuscript 2 also elaborates that the degree of mechanistic structure and the degree of

IT infrastructure positively affect the efficiency of support activities in a firm (P5a, P6a),

though these direct links are conditioned through the firm size (P5b, P6b). It is proposed that

the influence of mechanistic structure and IT infrastructure on the efficiency of support activi-

ties is higher in a larger firm than in a smaller firm because both affecting variables reduce

complexity in support activities and therefore can improve the efficiency of operation.

More generally, the manuscript extends the existing literature in several ways. In par-

ticular, the variables extracted in this study represent the main organizational antecedents for

implementation success. Therefore, this study helps to identify which antecedents affect suc-

cess and, more importantly, helps to explain) how these antecedents relate to success. The

arising theoretical model therefore constitutes a first, coherent explanation regarding the

emergence of SSCs in the implementation phase. Although this theoretical model faces some

limitations, such as restriction on the organizational level, it delivers a starting point for future

research (Section 7 discusses this limitation in detail). Furthermore, the propositions can be

used in quantitative-empirical research to formulate testable hypotheses.

Manuscript 2 also starts the transition from a nascent stage to an intermediate stage of

theory research because it introduces new constructs in the research stream, proposes relation-

ships of constructs, and ultimately formulates a provisional theory. Moreover, it establishes a

basis for further research on SSC implementation by using knowledge from prior works. In

that regard, Hoon (2013, p. 544) points to the fact that a meta-synthesis is most apt for re-

search in an intermediate stage because it “can be helpful in converging [the] growing body of

37

knowledge into new insights.” To conclude, Manuscript 2 fulfills several criteria for an inter-

mediate research stage suggested by Edmondson and McManus (2007).

6.5 Empirical Evidence of the Provisional Theory

The results in Manuscript 2 represent a comprehensive theoretical explanation for both ques-

tions. To verify the substance of these theoretical statements, the theory must be empirically

tested; however, an empirical test of the entire implementation theory would be too demand-

ing for quantitative studies. Manuscript 3 therefore examines a sub-model of the provisional

theory: specifically, a capability-structure-success model is derived and tested. Thus, this

manuscript advances our knowledge by confronting the theory with empirical data. Below,

the four key results are summarized.

First, the positive influence of reshaping capability on implementation success was

hypothesized and empirically supported. Second, through building on the CBV and prior case

study works regarding shared services, we determined that IT capability seems to be another

important antecedent for success. IT capability was defined as a capacity to integrate new IT

resources from outside the firm and to shape the existing IT resources within a firm (Bha-

radwaj, 2000). A positive relationship between IT capability and implementation success was

hypothesized, but our empirical data did not confirm the positive association. Surprisingly,

the data show a slightly negative relation for the IT capability-success link.

Third, consideration of the mechanistic structure as mediating variable is helpful to

explain this unexpected result; it reveals that the IT capability facilitates implementation suc-

cess because it supports the renewal of organizational structure in firms’ support activities—

that is, IT capability is highly important for implementation success because it facilitates the

change of support activities’ organizational structure. To explain this result, it seems reasona-

ble to assume that most firms do not constantly integrate new IT resources. Therefore, they

38

need initial investments to build IT capabilities at the beginning of SSC implementation. We

speculate that the negative direct influence of IT capabilities on the success occurs for this

reason. In short, firms invest money and draw from resources that are needed elsewhere to

buy, build, or strengthen IT capability, which ultimately reduces the success of an SSC im-

plementation.

Fourth, the data support the suggested indirect effect of reshaping capability on im-

plementation success via the mechanistic structure. However, we find only a partial mediation

effect, which let us conclude that further mediation variables may play a role explaining the

reshaping capability-success link (see the opportunities in Section 7).

With this study, we first provide empirical evidence of how organizational antecedents

contribute to implementation success of an SSC. Organizational constructs are solely dis-

cussed at an abstract level because the research stream is currently dominated by qualitative

works (see Manuscript 1). However, to conduct empirical research in this stream of literature,

measurable constructs are needed. This manuscript identifies and introduces well-established

constructs from competitive advantage literature (i.e., reshaping capability and IT capability),

organizational literature (i.e., the structural variables), and project management literature (i.e.,

implementation success). Future empirical research in the SSC domain may benefit by fol-

lowing these directions.

Beyond the empirical contribution of the manuscript, it also extends the provisional

implementation theory. Particularly, Manuscript 3 builds on arguments from the CBV to iden-

tify a new antecedent: IT capability. Moreover, it uses the descriptive information in prior

case studies to hypothesize how the antecedent influences implementation success. Conse-

quently, Manuscript 3 contributes to both research questions (which antecedents affect im-

plementation success and how) in this part of the thesis.

39

Overall, these contributions show that the stream has certainly reached an intermediate

stage of research. Moreover, studies can now build on prior literature to investigate proposed

relationships between established and/or new constructs, and use a broad range of methodolo-

gies to conduct these investigations. In summary, these characteristics of the current state of

shared service literature fulfill the intermediate stage criteria from Edmondson and McManus

(2007).

7. Conclusion, Limitations, and Future Research

The overriding purpose of this thesis is to substantially advance research on shared services,

particularly through following an archetypical research process: a methodological pathway.

This pathway is a sequence of a qualitative design, hybrid design, and quantitative design, and

is well-suitable for this thesis because it helps to systematically synthesize, use, and extend

the previous knowledge base on shared services.

More specifically, two important research objectives are addressed in this thesis. The

first objective concerns the scattered knowledge of the shared service literature. Manuscript 1

uses a qualitative review design to summarize and connect the diverging streams in the shared

service area and proposed concise research directions. Thus, it fosters a more coherent re-

search community. The second objective concerns the lack of research on the implementation

of SSCs. Manuscript 2 therefore uses a hybrid meta-synthesis approach to generate a provi-

sional organizational theory on the setup of SSC, and Manuscript 3 tests these theoretical

suggestions using survey data from SSCs’ top managers.

Against this background, the dissertation provides a sound explanation on the emer-

gence of SSCs in a firm. However, the findings should be viewed in the light of several limi-

tations. First, all manuscripts in this thesis advance our theoretical understanding at an organi-

40

zational level analysis but neglect aspects of other levels. The previous case study literature

on shared services shows, for instance, that institutional-level antecedents like institutional

entrepreneurs (e.g., Hyvönen et al., 2012) and individual-cognitive level characteristics, such

as managers’ cognitive ability to renew resources (e.g., Maatman et al., 2010), could be im-

portant antecedents of a successful SSC implementation. Therefore, a promising avenue for

future research is the integration of factors as well as their relationships at other levels of

analysis and thus the extension toward a multi-level theory.

More specifically, subsequent research may include further mediating mechanisms in

the reshaping capability-implementation success relationship. In Manuscript 3, we show that

this link is partially mediated, which in turn indicates that further characteristics play a role.

Qualitative works such as case studies, interviews, surveys, and/or longitudinal research de-

signs could be useful to enrich our knowledge of factors can be integrated, why and how.

Second, it is important to note that research in social science, unlike in natural science,

is generally limited to assume universal cause-effect relationships (Brühl, 2017). Particularly,

the findings in Manuscript 3 face this issue because the data are cross-sectional in nature. Alt-

hough the study uses retrospective measures (i.e., the strength of organizational capabilities

before the SSC implementation) to reduce the lack of longitudinal data, the results should be

considered with caution because the appropriateness of this type of data collection has yet not

been fully clarified.4 Overall, the tested relationships in Manuscript 3 and also proposed rela-

tionships in Manuscript 2 should be seen as regularities between elements instead of causality.

Finally, one limitation that pertains to Manuscript 3 is the selection of our sample. The

sample is comprised of senior executives from financial SSCs that emerge in large European

companies. As such, three characteristics reduce the generalizability. First, it lacks other manage-

ment perspectives, such as managers in SBUs, who have a customer view on an SSC’s services

4 See for example the discussion and contradictory empirical findings on retrospective measures in the Academy

of Management Journal (Golden, 1992; Miller, Cardinal, & Glick, 1997).

41

and thus may have another perception of implementation success. Second, the sample includes

solely European-headquartered companies. Therefore, the study is limited to generalize results for

companies in other geographical regions. Third, our sample concentrates on very large multina-

tional corporations listed in the STOXX Europe 600 and is therefore restricted to make assump-

tions for smaller, non-listed companies. This issue is salient because we found that firm size is

important for an SSC’s implementation success. Nevertheless, Manuscript 3 is the first quantita-

tive study on SSC implementation and thus provides initial empirical evidence on the theorized

relationships. We encourage future research to replicate findings in different settings to extend the

generalizability.

Whereas the centerpiece of future research directions concerns an SSC’s implementa-

tion, scholars in this field should also address another important avenue: what are the conse-

quences resulting through shared services? Yet, there is still a lack of understanding how

SSCs affect reliable firm level measures—for instance, return on assets, profit, cost-

efficiency, and productivity (see potential measures in Jiang, Frazier, & Prater, 2006). More-

over, previous downsizing literature shows that announcements of such projects might influ-

ence market returns of a company (e.g., Nixon, Hitt, Lee, & Jeong, 2004). How does the mar-

ket react to a shared service announcement? This question seems important because on the

one hand, it seems that shared services can actually reduce the operational cost level, but on

the other hand, it generates a loss of valuable human capital, which could adversely affect a

company. Against this backdrop, addressing the consequence perspective of SSCs is a very

promising way to gain a more comprehensive picture of shared services, at least at an organi-

zational level of analysis.

42

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