Testing competing HRM-performance linkage models: evidence from the Greek manufacturing sector

Abstract

This paper proposes an integrative framework for the conduct of a more thorough and robust analysis regarding the linkage between Human Resource Management (HRM) and business performance. In order to provide the required basis for the proposed framework, initially, the core aspects of the main HRM models predicting business performance are analysed. The framework proposes both the principle of mediation (i.e. HRM outcomes mediate the relationship between organisational strategies and business performance) and the perspective of simultaneity of decision-making by firms with regard to the consideration of business strategies and HRM policies. In order to empirically test this framework the methodological approach of 'structural equation models' is employed. The empirical research is based on a sample of 178 organisations operating in the Greek manufacturing sector. The paper concludes that both the mediation principle and the simultaneity perspective are supported, emphasising further the positive role of HRM outcomes towards organisational performance.