Organizational Form Emergence and the Rise of Vendor Management Organizations

Abstract

This dissertation examines the emergence and consequences of a new organizational form, the Vendor Management Organization (VMO), a type of employment broker specializing in large-scale sourcing of contingent workers. The project follows the phenomenon from its beginnings as a disparate practice to its emergence into a well-established form. The project addresses two main research questions: 1) how did VMOs emerge as a form, spread, and become a powerful player in contingent staffing?; and 2) how did the emergence of VMOs restructure and transform interorganizational relationships between three groups of actors: client companies, VMOs, and temporary help agencies? Chapter 1 introduces vendor management and VMOs and provides an overview of the research. Chapter 2 presents the available body of literature on form emergence and the entrepreneurial, technological, and population-based directions of that strain of research. It then introduces resource dependence, transaction cost economics, and corporate control views of the firm as theories that could aid our understanding of organizational form emergence. Chapter 3 describes the study’s research methodology and details data collection strategies, sampling procedures, and research implementation. Chapter 4 provides an analysis of the archival data and describes the emergence of the VMO form. Chapter 5 lays out the consequences of VMOs emergence for interorganizational relationships between related entities. Chapter 6 concludes the dissertation with an overview of study results and findings, research insights, theoretical implications, limitations, and directions for future research. The dissertation is built upon two streams of data: an archival analysis of media accounts of vendor management and VMOs over a 20-year period; and semi-structured interviews with 45 executives and managers of temporary help agencies, VMOs, and client companies. The archival data covers 1995-2015, a period within which VMOs emerged as an identifiable, though fledgling, organizational form and later expanded to become a global force in contingent staffing. Interviews with representatives from the three groups offered detailed information on VMOs and vendor management. The observations and attitudes that emerged during the interviews contributed context and nuance to the archival data. I investigated and analyzed the VMO phenomenon incorporating grounded theory methodology and organizational theories of external environment. By combining the two approaches, I created a view of organizational emergence that stresses the relational, structural, and pragmatic aspects of form emergence. I found that interactive engagements between organizations contributed to the emergence and rise of VMOs, and suggest that relational activities between organizations, such as information asymmetry, transaction cost concerns, power dynamics, and prevailing corporate values, are powerful and often overlooked components of organizational form emergence. VMOs, which evolved over three phases – inception, mobilization, and institutionalization – reflected larger economic, corporate, and technological changes that 1) changed power dynamics between the organizational actors, 2) facilitated the creation and rise of the VMO form, and 3) helped construct the strategies VMOs used to promote and legitimate their roles as intermediaries. The rise of VMOs also had profound implications for interorganizational relationships in contingent staffing. The presence of a VMO eliminated direct relationships, and created mediated relationships, between the client companies and temporary help agencies, and established new direct relationships between VMOs and client companies. This dissertation contributes to the theoretical perspectives that inform the emergence of new organizational forms by focusing on the role of relational activities and theories of organizational environment. VMOs are a new phenomenon, and the study of their emergence is a unique case within which to trace an organizational field’s inception, growth, and movement from a practice into a legitimate industry. I suggest that an important but understudied way in which new organizational forms are created occurs when economic conditions, changes in corporate values, and the involvement of different organizational actors provide the opportunity for a new form to emerge.