The virtuous circle of human resource investments: A precrisis and postcrisis analysis |
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Authors: | Vicente Roca‐Puig Juan‐Carlos Bou‐Llusar Inmaculada Beltrn‐Martín Beatriz García‐Juan |
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Institution: | Vicente Roca‐Puig,Juan‐Carlos Bou‐Llusar,Inmaculada Beltrán‐Martín,Beatriz García‐Juan |
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Abstract: | We propose a dynamic model of positive feedback between human resource (HR) investments and companies' economic performance. The model assumes that HR investment increases profitability through labor productivity and, in turn, profitability improves HR investment through organizational slack. Based on data from a sample of 2,497 industrial companies over a 7‐year period (2005–2011), longitudinal analysis corroborates the existence of a two‐way relationship between HR investment and profitability over time. However, the emergence of an economic crisis weakens this feedback, identifying the effect of organizational slack on HR investment as the weakest causal chain link. In a postcrisis period, HR investment is not such a high priority for managers. |
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Keywords: | economic crisis longitudinal models profitability strategic human resource management |
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