Abstract
This paper aims to contribute to the understanding of Human Resource Management (HRM) practices and firm performance relationship, by conceptualizing an integrated framework to explain the mediating linkage through sequential analysis of individual, job, and unit level outcomes whilst exploring contextual factors influencing this relationship. This aim is achieved by critically reviewing different strands of literature. There is an on-going debate that empirical explanations of how HRM practices influence firm performance are inconclusive, abstract, and lacking theoretical justification. In response, literature highlights a dire need of developing comprehensive integrated frameworks to explain this relationship. Thus, a theoretically and empirically driven framework is proposed by employing employee work effort, job performance, and unit performance in sequence as the intervening/mediating linkage of the proposed HRM-firm performance relationship. Future researchers may find the proposed integrated framework as a template to articulate a holistic view of this relationship.
Highlights
The strategic perspective of human resource management is labelled as SHRM and it describes the effective deployment of human resource for an organization to achieve its goals (Delery & Doty, 1996)
Drawing from resource-based view (RBV) of the firm (Barney, 1991, 2001; Shaw, Park, & Kim, 2013; Wright, Coff, & Moliterno, 2013), the Human Resource Management (HRM) practices have been recognized as a strategic asset/resource (Amit & Shoemaker, 1993; Becker & Gerhart, 1996) since they contribute to achieve competitive advantage by enhancing employees’ productive capabilities towards performance requirements of a firm (Youndt et al, 1996)
Despite the impressive research support for the positive HRM-firm performance relationship, scholars have pointed out diverse gaps in the literature where unclear process of value creation between HRM practices and firm performance is the most highlighted (Priem & Butler, 2001)
Summary
The strategic perspective of human resource management is labelled as SHRM and it describes the effective deployment of human resource for an organization to achieve its goals (Delery & Doty, 1996). Wright and McMahan (1992, p. 298) have defined SHRM as “the pattern of planned human resource deployments and activities intended to enable an organization to achieve its goals”. Despite the impressive research support for the positive HRM-firm performance relationship, scholars have pointed out diverse gaps in the literature where unclear process of value creation between HRM practices and firm performance is the most highlighted (Priem & Butler, 2001) This is referred to as the ‘black-box’ issue in SHRM (Becker & Huselid, 2006; Boselie, Dietz, & Boon, 2005; Guest, 1997, 2011; Paul & Anantharaman, 2003; Priem & Butler, 2001; Sheehan & Foss, 2007). The implications of the proposed framework and areas for further development of this framework are discussed
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