HR flexibility and firm performance: analysis of a multi-level causal model

Human resource flexibility as a construct, how it develops, and its effect on firm performance have not received adequate attention in strategic HRM literature in spite of their obvious importance in today's dynamic competitive environment. Based on a study of 98 manufacturing and 103 service firms in India, this paper addresses these issues by developing and testing a multi-level model that attempts to explore the ‘black box’ of the interlinkages between the various components of HR flexibility and firm-level human, operational, and financial outcomes. The results suggest that a certain set of ambidextrous HR practices constitute a distinct dimension of HR flexibility, beyond the dimensions of flexibilities of skill, behaviour and HR practices as already identified in the existing literature. Evidences from both manufacturing and service sectors support the notion of HR value chain that suggests that HR system has a direct impact on firm-level HR outcomes which are most proximal, and its effects on increasingly more distal operational and financial outcomes are mediated by HR outcomes that it produces. Another important finding is that HR practices as a system have both direct and indirect (mediated by behavioural flexibility) effects on firm-level HR outcomes. Existence of significant direct effects highlights the important role that HR practices play as a structural mechanism in achieving superior firm performance.     

HR flexibility: Precursors and the contingent impact on firm financial performance

Using data from 170 for‐profit U.S. firms with 100 or more employees from 27 North American Industry Classification System (NAICS) industry subsectors, we investigated firm‐level precursors of HR flexibility and industry‐level boundary conditions of the HR flexibility—firm financial performance relationship. The findings denote that a contingency illumination is warranted in which consideration should be given to firm‐level factors such as flexibility business strategy and high‐performance work systems, which may play a key role in engendering HR flexibility, and external factors such as industry dynamism and growth, which may serve as boundary conditions that influence the relevance and impact of HR flexibility. This study is an important extension of extant HR flexibility research and adds clarity regarding the roles and relevance of HR flexibility and the circumstances in which HR flexibility and/or its focal factors may augment (or diminish) firm competitiveness and performance.     

Managing human resources in dynamic environments to create value: role of HR options

HR options as firm investments in human assets in uncertain environments to create the capability to flexibly respond to future contingent events have been recognised as valuable. However, the black box of causal interlinkages between environmental uncertainties, HR options and firm performance is yet to be explored in strategic HRM literature. Based on the data obtained from 108 IT software firms in India, this study empirically explores these linkages using a multi-level causal model. The results suggest that the use of HR options positively mediates the effects of environmental uncertainties on firm performance. The mediating influences of different types of HR options, used by the firms to manage various types of uncertainties affecting their human assets, on the operational and the financial performance of the firms are found to be different. Implications of findings of the study for managing investments in human assets under uncertainty have been discussed.     

Applying real options theory to HRM: an empirical study of IT software firms in India

Environmental uncertainties can impact the market value of a firm's human assets both positively and negatively, and make return on human assets uncertain over time. However, the strategic human resource management (SHRM) literature has so far focused almost exclusively only on the upside value of human assets of a firm. Real options theory can provide the process heuristics as well as the economic logic for guiding investments in human assets to create sustainable market value for firms operating in uncertain environments. In spite of the growth in popularity of the real options approach, no meaningful progress, however, has been made towards application of this approach to HRM. This study, using data from 108 IT software development firms in India, seeks to address this gap and make three important contributions to the SHRM literature: (1) operationalise the concept of HR options by identifying the HR practices that possess option value; (2) investigate how use of HR options affects firm-level performance; and (3) develop and test a causal model that links the various types of HR options that firms use to exploit uncertainties faced by them with the firm-level operational and financial outcomes. The results support the central hypothesis of the article that use of HR options by firms operating in uncertain environments would have positive impact on their operational and financial performance. Significant differences were observed in the nature of linkages between different types of HR options used to address different types of uncertainties, and the operational and financial performance of the firm.     

The relationship between human resource management practices,business strategy and firm performance: evidence from steel industry in Taiwan

The primary objective of this study is to investigate the relationship between human resource management (HRM) practices, business strategy and firm performance. We examined the following HRM practices: training and development; teamwork; compensation/incentives; HR planning; performance appraisal; and employment security. We surveyed 236 managers working at steel firms in Taiwan to explore their perceptions on the impact of HRM practices and business strategy on firm performance. The results of this study are summarized as follows: (1) HRM practices will be positively related to firm performance; (2) there is a close linkage between HRM practices and business strategy; (3) business strategies will be positively related to firm performance; (4) integrating HRM practices with business strategies will be positively related to firm performance.     

Human resource flexibility,organizational culture and firm performance: an investigation of multinational firms in Hong Kong

This article explores the relationships between human resource (HR) flexibility, organizational culture, and organizational performance. Drawing on previous works, we develop a conceptual model that links the constructs together. It is hypothesized that the three sub-dimensions of HR flexibility (i.e. employee skill flexibility, employee behaviour flexibility, and HR practice flexibility) affect adaptability culture, which in turn impacts HR-related and market-related outcomes. The data were collected via a questionnaire survey of HR directors/managers in multinational corporations (MNCs) in Hong Kong. The results of structural equation modelling (SEM) reveal the positive effects of employee behaviour flexibility and HR practice flexibility on adaptability culture. Employee skill flexibility, however, exerts no such effect. Further, adaptability culture is found to affect both HR-related and market-related performance in a positive manner.     

Human resource management systems,employee well-being,and firm performance from the mutual gains and critical perspectives: The well-being paradox

In this study, we explored the additive, interactive, and nonlinear relationships among human resource management (HRM) systems, employee well-being, and firm performance. Based on a sample of 14,384 employees nested within 1,347 firms, we obtained three main findings. First, HRM systems yield a performance effect that exceeds the effect of single practice, suggesting positive synergies among HRM practices. Second, the opportunity bundle has a positive impact on firm performance, but when integrating it with skills and motivation bundles, the result becomes negative, indicating dis-synergy of interactions among HRM bundles. Third, at moderate levels of adoption, HRM practices are positively correlated with employee well-being and higher levels of commitment, job satisfaction, and management relations, as well as lower levels of anxiety. However, at high levels, the relationship is less positive and even turns negative with lower levels of job satisfaction and management relations. To close, we present research implications and future directions after discussing our results.     

Antecedents and consequences of dimensions of human resource management practices in Vietnam

The purpose of this study is to extend the empirical research concerning the impact of human resource management (HRM) practices on organizational effectiveness into the context of developing and transitional economy countries. From a survey of 137 cross-sector companies, it was discovered that there are five dimensions of HRM practices currently in use in Vietnam. Variation in the application of these dimensions can be partly traced to several organizational characteristics, but most salient is the perception of management on the value of human resources. In some dimensions, this variation constitutes a source of the difference in the perceptual company performance. These findings break new ground to propose a process for implementing HRM practices in Vietnam.     

HR and firm performance at companies in Turkey： Correlative analysis

Aim of this study is to discuss matters with HR and finn performance. Therefore, we used HR and firm performance questionnaire from Delaney and Huselid （1996）. HR variables include recruitment, training, compensation and promotion. Firm performance divided into organizational and market performance. Therefore, correlation analysis demonstrates that HR has positive and significant relationship with organizational performance, and HR has positive but weak relationship with market performance. Therefore, we can propose that HR is partly correlated with firm performance for those companies in sample. Therefore, since we didn＇t realize demography of companies in study, it is arguable, findings of this study can be generalized to other companies in Turkey.     

Open search strategies and firm performance: The different moderating role of technological environmental dynamism

Mainly driven by the rapid progress of the ‘open innovation’ paradigm, previous research has devoted considerable efforts in investigating how the degree of openness to external knowledge influences firms׳ innovation performance. However, much less is known about its impact on performance at the firm level. Moreover, the question of which open search strategy is more suitable depending on environmental features is unresolved. We focus on breadth and depth as two distinct open search strategies and claim that, besides their different benefits in terms of learning and innovation, it is also necessary to consider their costs. Based on survey data of 248 high-technology manufacturing Spanish firms, this study extends recent research about the context dependency of openness effectiveness by showing that the effect of these two open search strategies on perceived firm performance is contingent with technological environmental dynamism in a reverse fashion. While search breadth is found to be positively associated with performance in less technologically dynamic environments, it seems to hurt performance in more dynamic contexts. On the contrary, while search depth is found to have a positive effect on performance in highly technologically dynamic environments, it appears to harm firm performance in more stable contexts.     

The role of human capital philosophy in promoting firm innovativeness and performance: test of a causal model

In the present study, we developed and tested a causal model of the relationships between firm strategy, industry environment, human capital philosophy, innovativeness, and firm performance. Our results indicate that a differentiation-oriented strategy influences the relative use of an empowerment-oriented human capital philosophy of the firm, moderated by a firm's industry environment. Moreover, firms' human capital philosophies moderated the relationship between strategy and firm innovativeness. We also found support for the proposition that innovativeness mediated the relationship between human capital philosophy and firm performance. In addition, results also indicate that industry dynamism influences new product sales directly and industry survival difficulty moderates the relationship between firm strategy and new product sales. Survival difficulty also had a negative effect on firm profit. Overall, we found support for the mediating roles of human capital philosophy and innovativeness in the relationships between firm strategy, industry environment and firm performance. Implications are discussed.     

A multi-level examination of quality-focused human resource practices and firm performance: evidence from the US healthcare industry

In today's business world, the role of quality has become ever more significant for organizations to compete in a global marketplace. Based on the quality management theory, this study empirically examines the relationship between quality-focused human resource practices (QHRP) and organizational performance outcomes. Data from 69 healthcare organizations indicate a strong support for this relationship. A Human Resource (HR) system focused on quality management was directly related to multiple dimensions of organizational performance outcomes (i.e., intangible – employee satisfaction and customer satisfaction – and tangible – profit). Specifically, two measures of QHRP, knowledge management and strategic management, were found to be positively related to the financial performance of firms implementing quality management. Process management is found to be negatively related to employee satisfaction. General Human Resources were positively related to both employee and customer satisfaction. Employee focus of the firms is also positively related to employee satisfaction. In addition, employee satisfaction is also related to both customer satisfaction and financial performance while customer satisfaction is found to be positively related to employee satisfaction. The findings indicate a generally strong positive relationship with the organizational performance outcomes. The results of this study are particularly important in showing HR's contribution to the organization's bottom line.     

Human resource management and performance in a developing country: the case of Eritrea

This study investigates the relationship between human resource management (HRM) practices and organizational performance. Results based on a sample of 82 organizations from private and public sectors in Eritrea indicate that some of the practices have a significant impact on employee turnover, absenteeism, grievances and productivity. While compensation was the only independent variable found to be statistically significant in affecting grievances, employee selection had no effect across all performance measures. However, the study's results offer support for the assertion that investments in HRM practices results in better organizational performance.     

Differentiation strategy,high-performance human resource practices,and firm performance: moderation by employee commitment

Drawing on the inducement–contribution perspective, we examined a moderated mediation model demonstrating how differentiation strategy affected firm performance indirectly through high-performance human resource (HPHR) practices. Data were collected from 81 service firms in an eastern province of China. Path analytic tests supported the findings that employee commitment (EC) moderated the fully mediated relationship between differentiation strategy and firm performance through HPHR practices. Specifically, a stronger EC enhanced positive associations between differentiation strategy and HPHR practices, and between HPHR practices and firm performance.     

HRM and organizational performance in northern and southern Europe

This article aims to extend understanding of the firm-level impact of strategic HR practices on organizational performance. Adopting a contingency approach, it develops a structural model that considers direct and indirect influences of market growth, business strategy formalization and HRM centrality and practices on organizational performance in Europe. The study uses a comparative approach, revealing differences between northern and southern Europe. Clear differences appeared between the two clusters in the HR policies and practices correlated with higher performance, thus indicating that the link between HRM and performance may be different in different geographies.     

HRM professionals and their perceptions of HRM and firm performance in the Philippines

This paper reports the findings of a study conducted in the Philippines that examines the extent of adoption of human capital-enhancing human resource (HR) and industrial relations (IR) practices. Differences between locally owned and other organizations in these practices and their relationship to firm performance were also investigated. Questionnaire responses were obtained from managers and union representatives from 128 organizations located in the Philippines. The results indicated that there was, on average, a fairly high level of adoption of practices consistent with a strategic approach to human resource management (HRM), with foreign-owned firms tending to show a slightly higher level of adoption of such practices. A scale representing the adoption of a more conciliatory and union-friendly IR approach was found to be a significant predictor of perceived firm performance. Surprisingly, the level of strategic integration between HRM and business planning and most human capital-enhancing HR practices were not significant predictors of perceived firm performance. Research and practical implications in relation to the role of HRM in enhancing firm performance are discussed.     

High‐commitment HR practices,employee effort,and firm performance: Investigating the effects of HR practices across employee groups within professional services firms

In this study, the authors examine the relationship between high‐commitment HR practices and firm performance in professional services firms through the mediator of employee effort. In addition, they contribute to the debate in the field of strategic HRM on whether high‐commitment HR practices should be used across all employee groups within a firm. Their study's results show that high‐commitment HR practices positively relate to firm performance through employee effort for two employee groups within professional services firms. Further, they found that the relationship between effort and performance is contingent on the value of the employee group to firm competitive advantage, suggesting that companies may only want to expend the effort and resources on building a high‐commitment HR system for employee groups that are clearly tied to creating firm competitive advantage. © 2011 Wiley Periodicals, Inc.     

Configurations of human resource management practices: a model and test of internal fit

This study examined human resource management (HRM) configurations. A typology consisting of four bundles of aligned HRM practices (labelled the bureaucratic, market, professional and flexibility bundle) linked to organizational structures was developed. Support for the proposed ideal-typical bundles was found in an assessment by a panel of experts. Next, the distance between the ideal types and actual bundles of HR practices was assessed for 175 organizations. For each, senior HR managers' ratings of HRM practices and CEO ratings of outcomes were obtained. Support was found for two of the four proposed types and about one-third of the firms showed some fit with one of these two types. The ‘fit in general hypothesis’ (i.e. the closer an observed HR bundle resembles any of the ideal types, the higher organizational performance) did not receive support. However, fit with a specific type of bundle (the professional bundle) did relate positively to outcomes. Organizations with observed HRM practices fitting the professional bundle score significantly higher on measures of firm performance, employees' going beyond contract, and firm innovativeness.     

Employee ownership and firm performance: a meta‐analysis

Employee ownership has been an area of significant practitioner and academic interest for the past four decades. Yet, empirical results on the relationship between employee ownership and firm performance remain mixed. To aggregate findings and provide potential direction for future theoretical development, we conducted a meta‐analysis of 102 samples representing 56,984 firms. Employee ownership has a small, but positive and statistically significant relation to firm performance ( = 0.04). The effect is generally positive for studies with different sampling designs (samples assessing change in performance pre‐employee–post‐employee ownership adoption or samples on firms with employee ownership), different performance operationalisation (efficiency or growth) and firm type (publicly held or privately held). Suggesting benefits of employee ownership in a variety of contexts, we found no differences in effects on performance in publicly held versus privately held firms, stock or stock option‐based ownership plans or differences in effects across different firm sizes (i.e. number of employees). We do find that the effect of employee ownership on performance has increased in studies over time and that studies with samples from outside the USA report stronger effects than those within. We also find little to no evidence of publication bias.     

Strategic human resource management and its effects on firm performance: an implementation of the competing values framework

Based on the literature of the competing values framework, this paper develops a new HRM model and attempts to clarify what type of HRM (in terms of the orientation of the function) is linked with various aspects of firm performance. In order to acquire a better view of this much researched issue, three more factors that influence this relationship have been added to the equation: competitive strategy, external environment and organizational size. The empirical research was carried out in Greece among a sample of 104 organizations. The research findings show that when HRM is consistent with the competitive strategy it has significant effects on financial performance. Another important finding is that market performance is positively influenced by HRM flexibility and negatively influenced by HRM control, unless the external environment is complex, when the most successful combination is control-internal orientation.