Academic journal article Management Revue

HR Contribution to a Firm's Success Examined from a Configurational Perspective: An Exploratory Study Based on the Spanish CRANET Data**

Academic journal article Management Revue

HR Contribution to a Firm's Success Examined from a Configurational Perspective: An Exploratory Study Based on the Spanish CRANET Data**

Article excerpt

The objective in this study was to examine whether a firm's economic/financial success can be associated with the application of certain HRM policies, practices and strategies. In this empirical study, an extended rationale borrowed from a configurational conceptual model was used in order to examine the multiple linkages and architecture between certain HR policies and practices, HR Department characteristics as well as some organizational characteristics, and the overall economic/financial performance of the firm. Employing a series of ANOVAs and classification and regression tree analyses, results show that HRM policies and practices play an important role in predicting the economic/financial success of the firm in the intermediate range. In relative terms and within the tree architectural structure, the HR variables explain significant variance, more than HR Department or organizational characteristics. Controlling for size and economic sector, results show that the HR function within certain configurations plays an important strategic and operational role in adding value to the firm's bottom line; in contrast, when some HR policies and practices are absent or poorly implemented, the detrimental consequences to the firm's economic/financial performance can be observed.

Key words: Firm Performance, HRM, Configurational Analysis

The saying that employees are the critical element in a firm's success has become common wisdom. Indeed, a growing number of experts now state that the key to a firm's economic success can be attributed to the effective management of its human resources (Huselid 1995; Ulrich/Lake 1991). However, the links between HR effectiveness and organizational effectiveness have been explored from different conceptual angles (e.g., for an extensive review see Wright/Boswell 2002, or the special issue on "HR trends" in: Schuler/Dolan/Jackson 2001). The angle chosen for this study, is the multiple links that exist between certain HR policies and practices (e.g., staffing, compensation, training and the like), the characteristics of the HR Department (e.g., ratio of professionals, average level of education, and others), and the organizational features (e.g., size, sector, etc.), and the overall economic/financial performance of the firm.

"Our costs are lower because our productivity is higher, which is achieved through the dedicated energy of our people. We have the same equipment as other airlines. The difference is, when a plane pulls into a gate, our people run to meet it."

Herb Kelleher, Chairman Southwest Airlines (cited in: Diba/Muñoz 2001)

Recent years have been characterized by an increased interest in examining the added value of HR to a firm's success. The literature suggests that human resource management can be a source of sustained competitive advantage (Pfeffer 1994; Wright et al. 1994). Huselid (1995), for example, suggested that a proper configuration of human resources practices may not only help an organization sustain its competitive advantage, but may also contribute significantly to a firm's performance. The challenge that HRM has to face relates to the outcomes. What is important, says Ulrich (1998), is not so much what HR does, but its "deliverables", or its contribution to the overall organizational outcomes.

Certain research work has traditionally focused on the impact of HR practices on individuals or, alternatively, on examining that impact using the organization as the level of analysis. Another possible distinction (Wright/Boswell 2003) lies in the number of practices analyzed. Many scholars have focused on one or more HRM practices, and examined their effect on various performance measures (e.g., Banker et al. 1996; Delaney/Huselid 1996, Delery/Doty 1996; Harel/Tzafrir 1999; Khatri 2000, among others).

Studies in the late 90's have examined the effect of sets of HR practices on performance (Arthur 1994; Becker et al. 1997), and the characteristics and orientation of the HRM function and the link to performance (Huselid et al. …

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