Human resource management and firm performance

Abstract

This paper aims to explore the links between systems of human resource management practices and the firm performance in India. Content analysis of the annual reports was done to identify the human resources attributes disclosed by a sample of 165 large sized firms in India. The financial performance measures were collected from the Prowess database. Regression analysis was used to examine the effect of the human resource management system on the financial performance of the firm. Reverse causal effect of financial performance on the human resource management system was also examined using regression analysis. The study found that the human resource management practices have statistically significant impact on the measures of firm financial performance. The reverse causal relation showed that the financial measure market capitalisation has a significant and positive influence on the human resource management practices.