Value creation through HR shared services: towards a conceptual framework

Purpose – The purpose of this paper is to derive a measure for the performance of human resource shared service providers (HR SSPs) and then to develop a theoretical framework that conceptualises their performance. Design/methodology/approach – This conceptual paper starts from the HR shared services argument and integrates this with the knowledge‐based view of the firm and the concept of intellectual capital. Findings – The authors recommend measuring HR SSP performance as HR value, referring to the ratio between use value and exchange value, that together reflect both transactional and transformational HR value. They argue that transactional HR value directly flows from the organisational capital in HR SSPs, whereas human and social capitals enable them to leverage their organisational capital for HR value creation. The authors argue that the human capital of HR SSPs has a direct effect on transformational HR value creation, while their social and organisational capitals positively moderate this relationship. Originality/value – The suggested measure paves the way for operationalising and measuring the performance of HR shared services providers. This paper offers testable propositions for the relationships between intellectual capital and the performance of HR shared service providers. These contributions could assist future research to move beyond the descriptive nature that characterises the existing literature.