The relationship between freelance workforce intensity, business performance and job creation

Abstract

Despite the growing recognition that freelancers or temporary contract workers are increasingly being used by organisations to enable them to become more dynamic and innovative, there is a lack of research exploring the extent and manner in which freelancers create value-added and affect net job change for employees. Most analyses view freelancers as substitutes for employees who compete for the same work and so add little or no value-added over that already provided by employees. More recent perspectives portray freelancers as non-competing complementary providers of differentiated labour who help create jobs for employees by enabling businesses to become more agile and entrepreneurial. We explore this empirical agenda and find that freelancers are associated with sales growth in businesses and net job creation for core employees. In the process, we also discover that in order to establish these effects, firms must achieve a critical mass of freelancers in their workforce of a scale around 11% before a positive association emerges. This finding has central relevance for managers seeking to use freelance workforce intensity to enhance business performance. Moreover, while it has some intuitive appeal, this discovery requires further research to fully understand its cause and the process generating this outcome.

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Fig. 1

Notes

  1. 1.

    Acquired by the Japanese conglomerate SoftBank for $31.6bn in 2016 (Massoudi 2016).

  2. 2.

    See Hardin and Hilbe (2012).

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Burke, A., Cowling, M. The relationship between freelance workforce intensity, business performance and job creation. Small Bus Econ 55, 399–413 (2020). https://doi.org/10.1007/s11187-019-00241-x

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Keywords

  • Temporary contract workers
  • Freelancers
  • Flexible organizations
  • Job creation
  • Business performance

JEL codes

  • J41
  • L24
  • L26
  • M21
  • O25