The relationship between human resource management and firm performance in small businesses: evidence from Canada and New Zealand

Abstract

Despite an extensive body of research examining Human Resource Management (HRM) and firm performance, relatively little has addressed this issue using all three firm performance outcomes, namely, employee performance, operational performance and financial performance. In addition, little research has focused on small firms or compared differences between countries. This paper uses data from three studies from two different countries to examine the relationship between HRM practices and perceptions of firm performance. The findings from all three studies indicate that the effect of HRM practices on firm financial performance is mediated by overall employee satisfaction and operational performance.