Human Resource Development and Long-term Organizational Performance

Abstract

Building on human resource development (HRD) literature, this study investigates the processes through which various HRD dimensions affect the operational and financial performance of manufacturing organizations. We identify four distinct dimensions of HRD that reflect quantitative or qualitative perspectives with either managerial or employee focus. We further propose that HRD influences firm performance by shaping employee outcomes, including commitment and competence. Multi-source data collected from 207 manufacturing companies at three time points over a five-year period largely support our theoretical propositions. Quantitative dimensions (e.g., financial investment in HRD) predict only employee commitment. In contrast, qualitative dimensions (management support for HRD and perceived benefits of HRD) enhance both employee commitment and competence. Results of the analysis demonstrate synergistic interactions between quantitative and qualitative dimensions of HRD in the prediction of employee outcomes. A series of structural equation models confirms that HRD improves employee commitment and competence, which in turn, directly predict operational performance of the organization that ultimately shapes its financial performance. This study elaborates the distinct values of the different dimensions of HRD and highlights the significance of employee outcomes as the mediating mechanism between HRD and firm performance.