Corporate governance, HRM practices and organizational performance

Abstract

This study is unique as it analyzes corporate governance concept from a stakeholders’ perspective, instead of the more dominant shareholders’ perspective as indicated in previous studies. The study attempts to bridge the gap in the existing literature by examining the link between corporate governance, HRM practices and organizational performance. Attempt is also made to include the role of HRM as a mediator in explaining the relationship between corporate governance practices and firm performance. Data were collected from public listed companies in the consumer product sector in Malaysia. Using multiple regression analysis, the significance of the relationship between HRM practices and organizational performance is observed thus provides the evidence that HRM plays an important role for companies and this parallels previous studies. The result also implies that there is a link between corporate governance practices implemented in companies and the types of HRM practices implemented. Most importantly, the findings of the study reveal that the stakeholder approach is a viable approach to be taken in studying corporate governance. Despite the difficulties in gaining co-operation and responses from the companies involved, it proves that the stakeholders specifically the employees are aware of the issue of corporate governance and the companies are required to raise and maintain their standards.