Academy of Management Journal 2012, Vol. 55, No. 6, 1264–1294. http://dx.doi.org/10.5465/amj.2011.
HOW DOES HUMAN RESOURCE MANAGEMENT INFLUENCE ORGANIZATIONAL OUTCOMES? A META-ANALYTIC INVESTIGATION OF MEDIATING MECHANISMS
KAIFENG JIANG DAVID P. LEPAK Rutgers, the State University of New Jersey JIA HU University of Notre Dame JUDITH C. BAER Rutgers, the State University of New Jersey
Drawing on the ability-motivation-opportunity model, this meta-analysis examined the effects of three dimensions of HR systems—skills-enhancing, motivation-enhancing, and opportunity-enhancing—on proximal organizational outcomes (human capital and motivation) and distal organizational outcomes (voluntary turnover, operational outcomes, and financial outcomes). The results indicate that skill-enhancing practices were more positively related to human capital and less positively related to employee motivation than motivation-enhancing practices and opportunity-enhancing practices. Moreover, the three dimensions of HR systems were related to financial outcomes both directly and indirectly by influencing human capital and employee motivation as well as voluntary turnover and operational outcomes in sequence.
In the past two decades, researchers in strategic human resource management (HRM) have examined why and how organizations achieve their goals through the use of human resource (HR) practices. Although traditional HRM research has focused on the impact of individual HR practices, the strategic perspective on HRM research emphasizes bundles of HR practices, often referred to as highperformance work systems (HPWS), high-involvement work systems, and high-commitment work systems, in examinations of the effects of HRM on employee and organizational outcomes (Wright & McMahan, 1992). A burgeoning body of strategic HRM research has shown that the use of systems of HR practices intended to enhance employees’ knowledge, skills, and abilities, motivation, and opportunity to contribute is associated with positive outcomes such as greater commitment (Gong, Law, Chang, & Xin, 2009), lower turnover (Batt,
We thank the action editor for this article, Jason Shaw, and three anonymous reviewers, Patrick McKay, Rebecca Kehoe, and Mark Huselid for helpful comments and suggestions. We acknowledge financial support from the SHRM Foundation (Project No. 143). The interpretations, conclusions, and recommendations are those of the authors and do not necessarily represent those of the SHRM Foundation.
2002), higher productivity and quality (MacDuffie, 1995), better service performance (Chuang & Liao, 2010), enhanced safety performance (Zacharatos, Barling, & Iverson, 2005), and better financial performance (Huselid, 1995). Despite the robust evidence for the positive relationships between HRM and various organizational outcomes (Combs, Liu, Hall, & Ketchen, 2006), important issues remain regarding the mechanisms through which HRM is associated with different organizational outcomes. First, the theoretical logic underlying the mechanisms linking HRM and organizational outcomes remains fragmented (Huselid & Becker, 2011; Wright & Gardner, 2003). Specifically, some researchers have adopted a behavioral perspective to suggest that HR practices affect organizational outcomes by influencing employee role behaviors; if employees act in ways that are consistent with company goals, performance should improve. Other researchers have adopted more of a human capital and resource-based perspective, focusing on the potential contributions of employees’ competencies—that is, their knowledge, skills, and abilities. Interestingly, although employees contribute through both their competencies and their actions, researchers have typically focused on one perspective to understand how HR
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Jiang, Lepak, Hu, and Baer
systems impact organizational outcomes (exceptions include Takeuchi, Lepak, Wang, and Takeuchi ). Considering multiple perspectives simultaneously provides a broader and more complete picture of the relationship between HRM and organizational outcomes. Second, although prior research has demonstrated the mechanism through which HRM relates to some organizational outcomes, it remains unclear as to how HRM relates to different organizational outcomes that range from very proximal (i.e., HR outcomes) to more distal (i.e., financial outcomes). This lack of integration is problematic given the different perspectives adopted in the literature, perspectives that might highlight the importance of different but potentially related outcomes. Exploring the possible paths between HRM and financial outcomes will likely provide a more integrative model of how HR systems operate to impact a multitude of related and important outcomes (e.g., Becker & Huselid, 1998; Delery & Shaw, 2001; Guest, 1997). Third, it is assumed in existing research that the components of HR systems have identical impacts on outcomes. For example, when scholars adopt an additive approach to measure HR systems, each component of the system is treated as if it exerts an equal influence on the outcomes under investigation. Although this is a possible reflection of how HR systems operate, scholars have recently challenged this assumption and argued that different sets of HR practices may impact the same outcomes in a heterogeneous way (e.g., Batt & Colvin, 2011; Gardner, Wright, & Moynihan, 2011; Gong et al., 2009; Shaw, Dineen, Fang, & Vellella, 2009; Subramony, 2009). As these studies have suggested, it is important to explore the differential effects of the different components of HR systems. Given these issues, the primary objective of this study is to develop an integrative model of the mechanisms mediating between HRM and organizational outcomes through a meta-analytic approach. Drawing on the behavioral perspective on HRM, human capital theory, and the resource-based view of the firm, we aim to extend and refine existing HRM-organizational outcomes models by exploring multiple mediating paths and differentiating among the effects of subdimensions of HR systems.
THEORETICAL BACKGROUND AND HYPOTHESES Existing Theories and Research on Relationships between HRM and Organizational Outcomes Understanding the relationship between HRM and organizational outcomes is one of the long-
standing goals of macro HRM research. Indeed, Becker and Huselid (1998) considered this relationship as one of the essential pursuits of strategic HRM research. This stream of research has several key components. First, organizational outcomes are viewed as multidimensional. Drawing on Dyer and Reeves’s (1995) work, researchers in strategic HRM have categorized organizational outcomes into three primary groups related to HRM: HR outcomes, operational outcomes, and financial outcomes. HR outcomes refer to those most directly related to HRM in an organization, such as employee skills and abilities, employee attitudes and behaviors, and turnover. Operational outcomes are those related to the goals of an organizational operation, including productivity, product quality, quality of service, and innovation. Financial outcomes reflect the fulfillment of the economic goals of organizations. Typical financial outcomes include sales growth, return on invested capital, and return on assets. In this study, we use “organizational outcomes” to refer to all three categories of outcomes at the organizational level. Second, strategic HRM research suggests that different types of outcomes may not necessarily have equivalent relationships with HR practices (Becker & Huselid, 1998; Delery & Shaw, 2001; Guest, 1997; Lepak, Liao, Chung, & Harden, 2006; Ostroff & Bowen, 2000). Moreover, it is commonly asserted that HRM may influence the three types of organizational outcomes in sequence. For example, HR practices are expected to first influence HR outcomes (e.g., employee skills and motivation), which are proximal and the least likely to be contaminated by factors beyond HR practices. HR outcomes, in turn, may mediate the influence of HR practices on productivity, quality, service, safety, innovation, and other operational outcomes, which further affect financial outcomes. Although existing HR research often implies that HR outcomes serve as a key mediator between HR systems and key outcomes, the specific natures of models of this meditation depend on the theoretical perspective researchers have adopted when examining this relationship. On the one hand, several researchers have adopted the behavioral perspective of HRM (Jackson, Schuler, & Rivero, 1989). According to this perspective, organizations do not perform themselves, but instead use HR practices to encourage productive behaviors from employees and thus to achieve desirable operational and financial objectives (Becker & Huselid, 1998). If an organization requires efficient employees, for example, its chosen HR practices and their effectiveness would likely differ from those of an organization that requires employees to be cooperative, to
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focus on service, or to engage in some other critical role behavior. The effectiveness of HR practices is realized when employees act in ways that are needed for implementing strategies and achieving various business objectives. On the other hand, some macro HRM researchers have focused less on the behaviors of employees and more on their competencies within organizations. Researchers taking on this perspective often invoke human capital theory and the resourcebased view of the firm. Human capital theory emphasizes that human capital—the composition of employee skills, knowledge, and abilities—is a central driver of organizational performance when the return on investment in human capital exceeds labor costs (Becker, 1964; Lepak & Snell, 1999; Ployhart & Moliterno, 2011). The resource-based view provides additional insights as to why human capital can help firms to outpace competitors and proposes that organizations obtain a competitive advantage from resources that are rare, valuable, inimitable, and nonsubstitutable (Barney, 1991; Mahoney & Pandian, 1992). Researchers have argued that human capital, especially high-quality and/or organization-specific human capital, has the potential to serve as a source of competitive advantage (Wright, McMahan, & McWilliams, 1994). Organizations may use HR practices to create and maintain valuable human capital, including both generic and organization-specific human capital, which in turns drives high operational and financial performance (Becker & Huselid, 1998; Delery & Shaw, 2001; Ployhart & Moliterno, 2011; Snell & Dean, 1992). Although the behavioral perspective of HRM, human capital theory, and the resource-based view of the firm let researchers adopt different angles to look at the relationships between HR practices and more distal outcomes, under all three perspectives HR outcomes are viewed as a critical path from HRM to operational and financial outcomes. Even with this agreement, however, researchers have not successfully combined multiple approaches to delineate an overarching picture of how this path unfolds. For example, most of the extant empirical research has examined the influence of HR systems on operational or financial performance either through motivation-related variables (e.g., Chuang & Liao, 2010; Collins & Smith, 2006; Gelade & Ivery, 2003; Gong et al., 2009; McClean & Collins, 2011; Sun, Aryee, & Law, 2007) or through human capital variables (e.g., Cabello-Medina, Lopez-Cabrales, & Valle-Cabrera, 2011; Yang & Lin, 2009; Youndt & Snell, 2004). Insights into each type of variable are important yet insufficient to fully capture the process linking HRM to outcomes. Thus, research is
needed to explore how HRM can help organizations achieve financial goals through multiple paths (Takeuchi et al., 2007). Decomposing HR Systems into Three HR Dimensions Scholars have recently argued that although employees are exposed to HR systems rather than individual practices, the parts of these systems are not necessarily equivalent in their impact. Most research has portrayed an HR system as an additive index of a set of individual HR practices (Combs et al., 2006); there are reasons to believe, however, that the highly varied set of HR practices can be categorized into several subdimensions. Indeed, dividing HR systems into subdimensions is not new in strategic HRM research. For example, drawing on an employee-organization relationship framework (Tsui, Pearce, Porter, & Tripoli, 1997), researchers have argued that HR practices may be categorized as falling into HRM inducement and investment practices, and HRM expectationenhancing practices (e.g., Batt & Colvin, 2011; Gong et al., 2009; Shaw et al., 2009; Shaw, Delery, Jenkins, & Gupta, 1998; Shaw, Gupta, & Delery, 2005). The first two types are designed to improve employees’ expected outcomes, whereas the third type reflects organizations’ expectations about employees’ contributions. Taking a different approach, some researchers have drawn upon the ability-motivation-opportunity (AMO) model of HRM and suggested that employee performance is a function of three essential components: ability, motivation, and opportunity to perform. Extending this logic, HR systems designed to maximize employee performance can be viewed as a composition of three dimensions intended to enhance employee skills, motivation, and opportunity to contribute, respectively (Appelbaum, Bailey, Berg, & Kalleberg, 2000; Bailey, 1993; Boxall & Purcell, 2008; Delery & Shaw, 2001; Gerhart, 2007; Katz, Kochan, & Weber, 1985; Lepak et al., 2006). Recently, several empirical studies have adopted and validated this conceptual framework (e.g., Bailey, Berg, & Sandy, 2001; Batt, 2002; Gardner et al., 2011; Huselid, 1995; Kehoe & Wright, in press; Liao, Toya, Lepak, & Hong, 2009; MacDuffie, 1995; Subramony, 2009). In keeping with these studies, Lepak and colleagues (2006) suggested that it might be fruitful to conceptualize HR practices as falling into one of three primary dimensions: skill-enhancing HR practices, motivation-enhancing HR practices, and opportunity-enhancing HR practices. Skillenhancing HR practices are designed to ensure ap-
propriately skilled employees. According to the ability-motivation-opportunity framework. collective job satisfaction. Opportunity-enhancing HR practices are positively related to human capital. we also anticipate that the three HR dimensions may play different roles in building human capital and enhancing employee motivation. Typical ones include developmental performance management. and practices such as work teams. we propose the following: Hypothesis 1a. and job security. Indeed. and training and development may further provide employees with organization-specific skills with which to perform their work. 2007. Hypothesis 2b. Sun et al. First. 1964) and the norm of reciprocity (Gouldner. We also posit that the three dimensions of HR systems are positively related to employee motivation to different degrees. Skill-enhancing HR practices are more positively related to human capital than motivation-enhancing HR practices. and opportunity to contribute (Becker & Huselid. and employee motivation refers to the direction. Guest. we focus on the mediating roles of human capital and employee motivation. Furthermore... extensive benefits. According to social exchange theory (Blau. and abilities (Coff. 1997).g. Motivation-enhancing HR practices are positively related to human capital. skill-enhancing HR practices can directly help to optimize the levels or types of em-
ployees’ skills and abilities. Gong et al. & Sager. skills. they include comprehensive recruitment. Takeuchi et al. More specifically. 2004).g. 2001. competitive compensation. research suggests that practices such as competitive compensation. 2009.. Lepak.g.. Delaney and Huselid (1996) indicated that organizations can enhance the skills of their workforces both by hiring high-quality individuals and by improving the level of skills in their current workforces.. For example. Practices such as flexible job design. and flexible job design may provide employees with opportunities to share knowledge and to learn new skills.. employee involvement. Yang & Lin. We expect that.. 2007. employees who perceive an organization’s actions toward them as beneficial may feel obligated to reciprocate and be motivated to exert more effort at work. investment in all three HR dimensions generally indicates that organizations value and support employees’ contributions. the relationships between the other two HR dimensions and human capital are seen as less direct. Therefore. and human capital and employee motivation are two of the most critical mediating factors that have been examined in the literature (e. compared with motivation-enhancing and opportunity-enhancing HR practices. work teams. extensive benefits. Delery & Shaw. As previous research suggests. Skill-enhancing HR practices are positively related to human capital.. 2009). Motivation-enhancing HR practices are implemented to enhance employee motivation.. recruitment and selection practices are intended to insure that employees have the skills needed for task performance. Oppler. as manifested by positive work attitudes (e. Linking HR Dimensions to Multiple Outcomes According to the ability-motivation-opportunity model of HRM. Cabello-Medina et al. Hu. and extensive training. Liao et al. commitment.. Yang & Lin. motivation-enhancing HR
. 2011. Youndt & Snell. prior research shows that the use of comprehensive selection and training practices fostered employees’ collective human capital (e. rigorous selection. and information sharing are generally used to offer these opportunities. 2007. However. Opportunity-enhancing HR practices are designed to empower employees to use their skills and motivation to achieve organizational objectives. 1993). motivation. Gardner et al. 2002). 2009. Although we anticipate that all three HR dimensions are positively related to both human capital and employee motivation.2012
Jiang. 1998. Hypothesis 1c.g. intensity. Research has shown that practices from these two dimensions were less positively related to human capital than skill-enhancing HR practices (Cabello-Medina et al. 2011. incentives and rewards. and duration of employees’ effort (Campbell. organizational citizenship behavior). The use of the three dimensions of HR systems instead of a unidimensional or two-dimensional framework is based on an examination of differential effects of the three dimensions of HR systems on different types of HR outcomes. Hypothesis 2a. promotion and career development. skill-enhancing HR practices will likely have a stronger impact on human capital and a weaker impact on employee motivation. Hypothesis 1b.. Skill-enhancing HR practices are more positively related to human capital than opportunity-enhancing HR practices. 2011. employee involvement. 1960). human capital can be viewed as a composition of employees’ knowledge. perceived organizational support) and work behaviors (e. Takeuchi et al. HR outcomes can conceptually be divided into human capital. 2004). Youndt & Snell. In line with the literature. and job security may help attract capable employees and retain them in organizations. McCloy. Relatedly. 2009..
Practices such as work teams. Skill-enhancing HR practices are less positively related to employee motivation than motivation-enhancing HR practices. 1991. Hypothesis 3b. we hypothesize: Hypothesis 3a. operational outcomes. and participating in decision making (Batt & Colvin. even though training can improve employees’ skills at work. For example. these employees are reluctant to leave their organizations (e. Hypothesis 3c.
. Shaw et al. Recent empirical research that examined the influence of three HR dimensions on employee affective commitment (Gardner et al. 2011). 2011.. and job security) are more likely to provide employees with extrinsic motivation that links their work efforts to external rewards. In addition to the direct effects of the three HR dimensions on human capital and employee motivation. employees with higher levels of human capital will be less likely to leave their organizations. Arthur. Skill-enhancing HR practices are less positively related to employee motivation than opportunity-enhancing HR practices. 2007). Therefore. which facilitates the development of specific human capital (Ployhart & Moliterno.g. 2005). and flexible job design help to generate employees’ intrinsic motivation. Some researchers attribute the negative relationships to the emotional bond between employees and organizations formed by HR practices. The accumulated specific human capital may in turn reduce the likelihood employees leave.. employee involvement. Sun et al. receiving positive performance appraisals. Gardner et al. Gardner et al. 2011. Employees are unable to obtain return on their input in developing the specific human capital if they quit (Shaw et al. skill-enhancing HR practices can enhance employees’ skills and abilities. As a result. the effect of skill-enhancing HR practices on employee motivation is relatively indirect and likely to be contingent on the practices in the other two HR dimensions. 2001. 2009). which encourages them to seek out challenges at work (Ryan & Deci. 2000). Sun et al. Opportunity-enhancing HR practices are positively related to employee motivation. Therefore.g. 2011. compared with the other two dimensions. Hypothesis 5b. 1995). Batt & Colvin. 2011) has also supported this reasoning.. Huselid.. 1994. Therefore. Lepak & Snell. 2001. 2005. skill-enhancing HR practices are less positively related to employee motivation.. In addition.1268
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practices (e. researchers have suggested that employees with high levels of human capital are more capable of meeting job demands. because the specific human capital that is unique and valuable for their current organization may not provide value to other organizations (Barney. which may help career development and induce promotion opportunities in their organizations (Tharenou. & Moore. Batt.g. Human capital mediates the negative relationships between the three dimensions of HR systems and voluntary turnover. Employee motivation mediates the negative relationships between the three dimensions of HR systems and voluntary turnover. the increased skills may not necessarily lead to promotion in their organization. In addition. Motivation-enhancing HR practices are positively related to employee motivation. However.. obtaining promotions. we propose that human capital and employee motivation mediate the relationships between the three HR dimensions and more distal outcomes related to voluntary turnover (voluntary organizational exit). employees with high levels of human capital are better able to learn at work. 2007). First. 1998. Guthrie. 2009. Skill-enhancing HR practices are positively related to employee motivation.g. In other words. Therefore. 2011. and subsequent financial outcomes. Saks. Guthrie. Batt. Hypothesis 4b.. 1999). because HR practices enhance employees’ motivation at work. 2007). Hypothesis 4a... we hypothesize: Hypothesis 5a. performance-based compensation. incentives and benefit. employees are encouraged to work harder to reciprocate and thus are less prone to quit their jobs. Shaw et al.. compared with those with less human capital. Several researchers have viewed voluntary turnover as a critical intermediate outcome that is dis-
tinct from human capital and employee motivation (e. we expect all three HR dimensions to be positively associated with employee motivation and. 2002. 2002. Investment in the three aspects of HR systems implies that organizations value employees’ contribution and expect to establish long-term employment relationships with their employees. Human capital theory and the resource-based view of the firm indicate that employees with appropriate human capital resulting from HR investments may be less likely to leave their organizations. Research has consistently demonstrated that HR practices designed to enhance employee skills and motivation are significantly and negatively associated with voluntary turnover (e... promotion opportunities.
Morrow & McElroy. Shaw et al. Coff. Kacmar. research has also suggested that organizations need some level of voluntary turnover. Shull. no matter which kinds of employees leave. and training would have been in vain.g. Hefley. Especially when employees possess organization-specific human capital. Van Rooy. 2007. 2004. Employee motivation mediates the positive relationships between the three dimensions of HR systems and operational outcomes. At the same time. However. we propose mediating effects of voluntary turnover and operational outcomes on the relationships between the three HR dimensions and financial outcomes. Youndt. Batt. Strober. 1987.g. & Cerrone. 1994). 1981). quality. organizations also incur additional costs related to turnover (Dess & Shaw. the loss will be detrimental for organizations’ financial performance. hard to replace without significant costs. great service. In keeping these arguments. 2007). 2001). 1989). 1978). organizational strategy. we propose a negative relationship between voluntary turnover and financial performance. empirical studies have consistently demonstrated the existence of a negative relationship between voluntary turnover and financial performance (e. Schneider. Huselid. Glebbeek & Bax. Therefore. & Ketchen. Moreover. Further. operational outcomes will suffer during the vacant and training period. On the other hand.g. researchers taking a behavioral perspective suggest that the value of employees’ human capital cannot be realized unless they are willing to use their capabilities (Jackson & Schuler. For example. Lepak. 2002. 2001) and can be a source of competitive advantage when it is valuable and unique for an organization.g. 2006. organizations need to utilize HR practices to enhance their intrinsic and extrinsic motivation at work. The financial outcomes of an organization are a function of a variety of factors. and the organizations need to invest additional resources to search for and train new employees to replace the leavers. which also need new employees to provide fresh stimulus (Dalton & Todor. In a metaanalytic review. According to human capital theory and the resource-based view. 1995. & Ryan. Farley. 1994. Combs. Therefore. business operations within an organization may be a salient determinant of financial outcomes because outcomes such as productivity. 2010.. & Snell. Therefore. Wright et al. Hu. 2001). perceived organizational support) mediate the relationships between high-performance work systems and operational outcomes (e. Wright. Woehr. 2001). Likewise. and Hoenig (1990) found that quality of product and service were positively associated with financial outcomes. Researchers have widely recognized the potential impact of human capital on organizational effectiveness (Barney. The rationale for the positive relationship between operational outcomes and financial outcomes is clear in the literature. when capable employees leave. and Baer
Human capital and employee motivation are also expected to mediate the influence of the three HR dimensions on operational outcomes. depending on what kinds of employees leave and whether they have been replaced appropri-
ately. Human capital mediates the positive relationships between the three dimensions of HR systems and operational outcomes. Jovanovic. Gelade & Ivery. Todd. The relationship between voluntary turnover and financial performance is complex. Crook and colleagues (2011) also reported a positive relationship between operational out-
. an organization loses the human capital embodied in those departing and also loses the chance to realize a return on its investment in developing the human capital (Dess & Shaw.. organizations are more likely to achieve operational goals such as high productivity and quality. Steilberg.. & Schmitt. Sun et al.. 1995). Among these explanatory factors. which can further lead to desired work behaviors and discretionary efforts contributing to operational outcomes (Deci. and organizations need to take a long time to regain their competitive advantage (Osterman. A number of empirical studies have shown that positive work attitudes (e. 1997.. a high turnover rate can corrupt the morale of organizations and trigger more employees to leave their jobs.. 1979. 2011). and service are directly related to profitability (Curtis. Rogg. 2001. & Miller. selection. Chuang & Liao. 1990). Wright et al. Schmidt. Snell. 2003. This is because employees who do not fit their jobs will self-select out of organizations. Capon. and innovation. 1997. 2005). 2011). with high-quality human capital pools. & Wright. administrative resources used in recruitment. Connell.. and not easily imitated by rivals (Coff. To encourage employees to do so. Hypothesis 6b. 1991. Research has provided support for the positive effect of human capital on operational performance (Crook. and organizational characteristics (White & Hamermesh. thereby negatively affecting financial outcomes (Hausknecht & Trevor. 1979. Dunford. collective commitment) and positive perceptions of a work environment (e. human capital is the primary determinant of productivity (Dess & Shaw. 1995). we hypothesize: Hypothesis 6a.. According to human capital theory. Finally. including industry environment. 1996.2012
” “motivation.463 organizations. Web of Science.g. both of which can be sources of competitive advantage for organizations... Second. 2009. establishment. 2000).g.” “satisfaction.” “attitudes.1270
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comes and financial outcomes. Human capital. Four inclusion criteria were used to select studies. In contrast. & Lepak. Second. Third.” or “profitability. voluntary turnover. In sum. 2009. Bae & Lawler. we first searched the PsycINFO. 2005. METHODS Data Collection We tested the mediating hypotheses with the help of meta-analytic structural equation modeling (SEM) techniques (Cheung & Chan. human capital theory.g.” “commitment. Jackson.” “safety. or firm). when a study used two or more independent samples. Seidner. 1997. we used the same search terms
to search conference programs from the Academy of Management (AOM) and the Society of Industrial and Organizational Psychology from 2000 to 2010. Subramony. both theoretical and empirical research has suggested that HRM can provide firms with organizational capital reflected by internal fit and flexibility (Evans & Davis. sample sizes.” whereas for organizational outcomes. 2004). Richard & Johnson. Finally. Barling. Delery & Shaw. & Schuler.” “productivity. 1998) and social capital (Collins & Clark.” or “high-commitment work practice/system. we included studies in the meta-analysis if they reported at least one correlation among individual HR practices and various organizational outcomes. In building this framework. Cappelli & Neumark. We first developed the coding sheet and instructions as recommended by Lipsey and Wilson (2001). we focus on the mediating role of employees in the link of HRM with financial performance. 2003. We did not include studies that investigated individual-level relationships between employee-perceived HR practices/systems and individual outcomes (e. 2003) or cross-level relationships between organization-level HR practices and individual-level outcomes (e. including theoretical reviews (e.” “growth. Kelloway. our model does not exclude other paths through which HRM can help increase financial outcomes. and the resourcebased view of the firm. Wright & Boswell. To identify studies that could be used in the meta-analysis. The first author and the third author then independently coded a random selection of 15 articles to assess the level of agreement regarding sample sizes. Ichniowski. After both coders checked data entry and resolved errors.” “high-performance work practice/system. we propose a positive relationship between operational and financial outcomes. Andrade.. and operational outcomes partially mediate the positive relationships between the three dimensions of HR systems and financial outcomes. & Prennushi. Viswesvaran & Ones. they
. business unit. & Drake. Becker & Gerhart. we made an effort to identify unpublished studies through the listservs of the AOM’s Human Resources and Organizational Behavior Divisions. we considered only the one that provided more information.” “turnover.g. However. Becker & Huselid. employee motivation. and reliability. we referred to the reference lists of the prior reviews on this topic. effect sizes. 2009). & Wimbush. In view of these findings. 2009)..g. 2001.” “human capital.g. For HRM.. 1997). 2010). Studies without the statistical information (e. In fact.. First. Wright & Snell. We excluded the studies that only presented the correlations of HR systems rather than those of individual HR practices with organizational outcomes (e.” Moreover. 2009. 2002) and meta-analytic reviews (Combs et al. and operational outcomes in sequence. voluntary turnover.” “high-involvement work practice/system. we propose a mediating model in which the three dimensions of HR systems are indirectly related to financial outcomes through human capital. Lengnick-Hall. Chen.. The inclusion criteria yielded a final set of 116 articles representing 120 independent samples that included a total of 31. Takeuchi. Agarwala. Shaw.” “outcome. we focused only on studies that examined the relationships between HR practices and organizational outcomes at the organizational level (e... we searched for studies that also included the keywords “performance.g. Gittell. Huselid. we only included studies that emphasized the use of HR practices/systems in organizations but not the effectiveness or the value of these practices or systems (e. 2006. drawing upon the behavioral perspective of HRM. We used multiple keywords. Liao et al. correlation coefficients) necessary to calculate effect sizes were also excluded (e.” “service. Hypothesis 7. we coded these independent samples separately.. 1995). & Iverson. 2006. and ProQuest Digital Dissertations databases for studies published before May 2011. 2005. we hypothesize that the intermediate outcomes proposed in our model partially mediate the positive relationships between the three HR dimensions and financial outcomes..g. 1996. Lepak et al. Given these alternative possibilities. employee motivation.” “quality. when the same sample was used in two or more articles. we used the keywords “human resource work practice/system. 2001. Third. 1998. Lengnick-Hall. 2003.
if training practices were measured by archival data (e. we used a random-effects model to correct for the sampling error by weighting each study’s effect size by its sample size (Hunter & Schmidt. Subramaniam & Youndt. Subramaniam.. compensation. Lepak et al. organizational outcomes categories). Third. promotion and career development. 2009). selection.. Subramony. 2003. 1997. which has been used in previous meta-analyses in management (e.g. quality. 2002.80 reliability estimate.80 for this measure. & Snell.. Dalton.g. and training. Daily. employee involvement. market return. innovation. & Johnson. we combined the correlations among individual HR practices and outcomes using the formula provided by Hunter and Schmidt (2004: 435– 439): rxiyj rXY ϭ ͱ . Meta-analytic and Model-Testing Procedures To test the mediating model through meta-analytic SEM. In contrast. In addition. 2006. n and m are the numbers of HR practices and outcome variables respectively.g. In addition.e..g. we needed to calculate meta-analytic correlations among three dimensions of HR systems and different types of organizational out-
comes by correcting for measurement error and sampling error (Hunter & Schmidt.. By following previous research using the ability-motivation-opportunity framework (e. & Ellstrand. Gardner et al. we adopted a more conservative . HR dimensions) and the composites of outcome variables (i.g. we categorized these practices into three dimensions. & Roengpitya. selection. Second. employee motivation). Dalton. return on assets). Hu. perceived organizational support. ⌺r xiyj is the sum of the correlations between HR practices (e. if training practices were measured by reflective items (e. Employee motivation was reflected by collective job satisfaction. and overall operational performance as operational outcomes.. For example. For comparison purposes. and Dalton (2011). formal grievance and complaint processes. Organizational outcomes. Bosco. 2004) and the education level of a workforce. and information sharing. we created a single effect size for each relationship within each study.. recruitment. work teams. As suggested by Aguinis. we imputed the reliabilities using the weighted mean of the available reliabilities estimated from the other studies (Lipsey & Wilson. Pierce. r xixj is the average correlation among HR practices. and disagreements were solved through discussion between the two coders. 2004). We identified 14 HR practices frequently examined in the literature. Ellstrand. and r yiyj is the average correlation among outcome variables. we would correct for the reliability for training. n ϩ n͑n Ϫ1͒ r xixjͱm ϩ m͑m Ϫ1͒ r yiyj If it is assumed that x represents a dimension of HR systems (e. organizational commitment. skill-enhancing HR practices) and y represents a category of organizational outcomes (e. “This firm invests considerable time and money in training”) in a study that reported the reliability of these items. Dalton.2012
Jiang. Lepak. For those studies that did not report the reliabilities of the informant-reported measures. we also calculated the reliability-corrected correlation by using a reliability of 1. that lists all the included studies and our categorizations of the three HR dimensions and different types of outcomes. We first performed reliability corrections for informant-reported measures of HR practices and organizational outcomes to correct for measurement error.. Voluntary turnover only represented the percentage of employees who quit or voluntarily left the organizations.
. incentive. Motivation-enhancing HR practices consisted of performance appraisal.. and overall financial performance as financial outcomes.g. We summarized various organizational outcomes into five categories. we would correct for a reliability of . and we viewed return on assets. and training) and outcome variables (e. service. and Baer
independently coded the rest of studies. Johnson. Regarding the variables that were measured with archival data (e. organizational climate. Daily. Batt.. Youndt. The consensus rate was 96 percent. 1998. we viewed productivity. Skill-enhancing HR practices included recruitment.. Daily. to calculate the composites of HR practices (i. and organizational citizenship behavior. Dismissal rate and overall turnover rate were not included. Dalton. 2011. return on equity. opportunity-enhancing HR practices covered job design... Operationalization of Variables Three dimensions of HR systems. sale growth. This information is important to allow future research to replicate and extend this study. benefit. Human capital included overall organizational human capital measured via established scales (e.g. and job security. 2005.g.g. we provide a table. 2001). 1999). Certo.. Appelbaum et al.00 for archival measures and did not find changes in the main findings of this study. Guest..e. By using this formula.g. “On average how many hours of formal training do employees in this firm receive each year?”). collective satisfaction and commitment). 2000. in Appendix A.
1995). the root-mean-square error of approximation (RMSEA).90. the influences of motivation-enhancing HR practices (␤ ϭ . whereas skill-enhancing HR practices explained 17 percent. adding paths from skill-enhancing HR practices to both outcomes sig-
RESULTS Differential Effects of HR Dimensions Table 1 summarizes the correlation results of the relationships among HR dimensions and organizational outcomes categories. Acceptable model fit is associated with nonsignificant chi-square values and with a CFI greater than .04).03. 2000. Thus.01. Z ϭ Ϫ7. Moreover. p Ͻ .01) was significantly larger than the coefficients of motivation-enhancing HR practices (␤ ϭ .07. 2. Mediation Results Hypotheses 5 through 7 predict that the three HR dimensions have both direct effects and indirect effects through human capital. voluntary turnover. The results of relative weights represent the proportion of total variance (R2) explained by each HR dimension. Finally.82.01. employee motivation.01) and opportunity-enhancing HR practices (␤ ϭ . Compared with the arithmetic mean. we found significantly positive effects of three HR dimensions on employee motivation. n. SRMR ϭ . p Ͻ . the model fit of the proposed model was acceptable (2 ϭ 264. we included all three dimensions of HR systems in regressions examining their effects on human capital and employee motivation.). and 4. a significant Q suggests the heterogeneity of a given relationship.72 (Jöreskog & Sörbom. Petkova. p Ͻ . followed by motivation-enhancing HR practices (36%) and opportunity-enhancing HR practices (16%). Z ϭ Ϫ8. & Haritou.
3.07. & Wells. Overton. Consistently with our prediction. p Ͻ .01. We also tested the direct relationships between three HR dimensions and voluntary turnover and operational outcomes.68.72 (Jöreskog & Sörbom. Research has suggested that a random-effects model provides a more accurate estimate than a fixed-effects model when relationships are heterogeneous (Cheung & Chan. the harmonic mean gives much less weight to large sample sizes and thus results in a more conservative parameter estimate. 2005). p Ͻ . p Ͻ . We used two statistics to test the hypotheses predicting relative effects of three HR dimensions on human capital and employee motivation.01. Motivation-enhancing HR practices and opportunity-enhancing HR practices respectively explained 45 and 38 percent of the variance of employee motivation. Erez. and the standardized root-mean-square residual (SRMR)—were used to examine the viability of the structural models (Kline.07. As shown in Table 3.29. all three HR dimensions had significant and positive effects on human capital.01) were significantly stronger than that of skillenhancing HR practices (␤ ϭ . Similarly. The results of Z-tests show that the regression coefficient of skill-enhancing HR practices (␤ ϭ . All the proposed relationships among HR dimensions and organizational outcomes categories were significant and consistent with our prediction except for the direct relationship between opportunityenhancing HR practices and financial outcomes (␤ ϭ Ϫ. Four established model fit statistics— chi-square (2). and operational outcomes on financial outcomes.
. 2005). Because the sample sizes for different correlations were not identical. 2005.s. Z ϭ 8.10 (Kline. p Ͻ . which shows the significance of the difference between regression coefficients (Clogg. a 95% CI excluding zero indicates that one can be 95 percent confident that the confidence interval includes the average mean true score. we used the created correlation matrices in SEM computed in LISREL 8.01). Bloom. RMSEA ϭ . As presented in Table 3. In sum. we used Sobel’s (1982) test to examine the statistical significance of indirect effects. We tested the proposed model (Figure 1) by inputting correlation matrices (Table 1) into LISREL 8. 1998).01). 1995).29.05). 2005). 2004). p Ͻ .22. To test Hypotheses 1.74. The Q statistic indicates the variance in the sample-weighted mean correlation.09. p Ͻ . which has been commonly used to determine the relative weight of each predictor in explaining the variance of dependent variables (Johnson.64. we dropped this direct path from the model. 2005). and an SRMR less than . We also computed the 95% confidence interval (CI) around the sample-weighted mean correlation and Q homogeneity statistic. Confidence intervals provide an estimate of the variability around the estimated average correlation. the analyses of relative weights indicate that skillenhancing HR practices explained the largest percentage of variance in human capital (48%). an RMSEA less than or equal to . the comparative fit index (CFI). p Ͻ . CFI ϭ . which only marginally impacted fit (model 1: ⌬2 ϭ 4.65.01) and opportunity-enhancing HR practices (␤ ϭ . As shown in Table 2. Z ϭ 2. One was the Ztest. To analyze mediation. p Ͻ . Hypotheses 1 through 4 were supported.08. and the other was the epsilon statistic.25. we imputed the sample size for the SEM analyses by calculating the harmonic mean of the correlation sample sizes (Viswesaran & Ones. 1996. Johnson & LeBreton.98.1272
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61 111.27 189.01
nificantly improved fit over that of model 1 (model 2: ⌬2 ϭ 80. AϪO
Employee Motivation %R
.29 .30** 14.22.24: .363) Ϫ.2012
Jiang.05 ** p Ͻ .37.33.165) . 25 37 (11.354) .22.62** .01
. However.674) Ϫ.37 63. rc) k (N) 95% CI Q 1 2 3 4 5 6 7
.002) Ϫ.915) .041) .37.52 855.068) .25.40: .22 19 (8.14: Ϫ. Ϫ. Q is the chi-square-test for the homogeneity of corrected correlations (rc) across studies. Opportunity-enhancing practices (r.224) .19 17 (4.s.19.26: . 38 23 (4.).91** Ϫ. * p Ͻ .25 213.31: .60**
.38.966) .34: .37: .23** Ϫ.23: .29 .21 19 (6.37 23. 27 41 (12.249) .06: .591) .33 626.576) .04**
Ϫ.26 7 (1.58* . rc) k (N) 95% CI Q 5. 42 12 (1.15.079) .09: Ϫ. Operational outcomes (r.07 . 38 17 (3.25.61**
Ϫ.39** . Lepak.10: Ϫ.90** 16.53 130.25: .198) .76** 12.61** Ϫ.02.57 133.18: Ϫ. we added the direct paths from motivation-enhancing HR practices to voluntary turnover and operational outcomes and found a significant improvement in the fit over that of model 3 (model 4: ⌬2 ϭ 10.15. Furthermore. * p Ͻ .88** . Z is the test for the significance of the difference between the regression coefficients.879) Ϫ.31.53 822. 32 20 (4. 30 13 (2.17 24 (6.07 .38.19. 41 19 (4.35** .08: Ϫ.84**
.32 32.46** .29 142.51 148. p Ͼ .12** 3.26 130.24**
a The mean sample-size-weighted correlation (r) and mean sample-sized-weighted correlation corrected for attenuation due to unreliability (rc) are presented.25 Ϫ8. Ϫ.01). Dropping this path did not impact fit (model 3: ⌬2 ϭ 1.61** .10: Ϫ.74** 8.22 .028) .47 142.95** .64** Ϫ7.15.05).22.79** Ϫ. 32 36 (10.39 354.19 22 (6.53 108. 26 41 (9.21: .36. Skill-enhancing practices 2. Financial outcomes (r. rc) k (N) 95% CI Q 6. and Baer
TABLE 1 Meta-analytic Correlations between HR Dimensions and Organizational Outcomesa
Variables 1.092) Ϫ.670) .15.22 2.73**
. Employee motivation (r.
t 15.21: . A “k” indicates the number of independent samples.38. The
TABLE 2 Results of Differential Effects of HR Dimensions on Human Capital and Motivation-Related Attitudesa
Human Capital Predictors Skill-enhancing HR practices (A) Motivation-enhancing HR practices (M) Opportunity-enhancing HR practices (O) Total R2 Z. 43 22 (4. 48 33 (8.32. p Ͻ .49** . 46 55 (14.33 384.37 11 (2. rc) k (N) 95% CI Q 7.25. Motivation-enhancing practices (r. The 95% CI is the 95% confidence interval around the mean sample-size-weighted corrected correlation (rc).25.01).17: . Ϫ. Ϫ.27: .07** .740) . p Ͻ . 42 13 (2. Voluntary turnover (r. 24 12 (2.56 208.71.25: .51 206.17.32.01: Ϫ. 38 19 (3.618) . 29 8 (1.219) . rc) k (N) 95% CI Q 4.055) Ϫ. rc) k (N) 95% CI Q 8.33 384. and “N” is the total sample size.97** .25: .16: . the path from skill-enhancing HR practices to voluntary turnover was not significant (␤ ϭ Ϫ.013) .40: .26: .16** .25.05 ** p Ͻ .70**
%R2 17% 45% 38%
48% 36% 16%
Standardized coefficients are presented.30 181.13: .92** . 44 50 (13.19. Ϫ.32 247.53 557.610) .39: .49 175. 47 49 (13.38** .863) .32.24** . Human capital (r. Hu.07**
t 3.30: .39 436. 32 35 (9.25 .14** Ϫ.75** .57 547. AϪM Z.54.56. rc) k (N) 95% CI Q 3.181) Ϫ. Ϫ. 20 27 (5.51 183.35.647) .
05 .99 .78 180.56e 10. * p Ͻ .05 .32 321. d Adds the direct paths from skill-enhancing HR practices to voluntary turnover and operational outcomes.07 .98 .54 130.22**e
.03 .54 190.82 269.08 .99 . Deletes the direct paths from opportunity-enhancing HR practices to financial outcomes.01
.32 237.71**e 1.98 .02 .72**k
n ϭ 3.76e 50. i Adds the direct path from opportunity-enhancing HR practices to voluntary turnover and operational outcomes.51
9 10 8 9 7 8 6 16 14
4.08 . j Adds the direct path from HPWS to both voluntary turnover and operational outcomes.05 ** p Ͻ . g Adds the direct paths from motivation-enhancing HR practices to both voluntary turnover and operational outcomes.32 610.76 244.74 450.47 188.32 570.03
.08 .04 .74 406.78 236.08 .98 .99 .03 . f Deletes the direct paths from skill-enhancing HR practices to voluntary turnover.47 244.09 .08 . e Model fit compared with the previous model.54**e 0.32 179. h Deletes the direct path from motivation-enhancing HR practices to operational outcomes.724.03 .09
.03 .65*c 80.98 .76 190. k Model fit compared with the theoretical model of the effects of HPWS on organizational outcomes (Figure 3).1274
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FIGURE 1 Theoretical Model of Effects of HR Dimensions on Organizational Outcomes
Skill-Enhancing HR Practices
MotivationEnhancing HR Practices
Employee Motivation OpportunityEnhancing HR Practices
TABLE 3 Fit Statistics for Alternative Modelsa
Models Three HR dimensions Theoretical model (Figure 1) Alternative model 1b Alternative model 2d Alternative model 3f Alternative model 4g Alternative model 5h Alternative model 6i (Figure 2) Latent high performance work systems (HPWS) Theoretical model (Figure 3) Alternative model 7j (Figure 4)
264. c Model fit compared with the theoretical model of the effects of three HR dimensions on organizational outcomes (Figure 1).95 .
01 for employee motivation) and were positively related to operational outcomes (␤ ϭ . 05.29**
. employee motivation (. motivation-enhancing.01). p Ͻ .89. voluntary turnover. voluntary turnover was negatively related to financial outcomes (␤ ϭ Ϫ.08**
Voluntary Turnover R2 = . p Ͻ .02. Sobel (1982) tests showed that the indirect relationships between all three HR dimensions and voluntary turnover. and . ␤ ϭ Ϫ.44** . We obtained the indirect effects and total effects of the three HR dimensions on financial outcomes from the estimates in SEM.01 for human capital. we kept model 6 as the final model for the mediation analyses. Both human capital and employee motivation were negatively related to voluntary turnover (␤ ϭ Ϫ. Hypotheses 5 through 7 were generally supported.13**
. all p-values were less than .26).).01).07** .). n ϭ 3.25**
Standardized coefficients are presented.15. voluntary turnover.08. and financial outcomes (. employee motivation.07** –.05** OpportunityEnhancing HR Practices
Employee Motivation R2 = .22). and financial outcomes were significant (Z varied from 8.s.42. voluntary turnover (. We also calculated the squared multiple correlations (i.s.20.21** .
FIGURE 2 Final Model of Effects of HR Dimensions on Organizational Outcomesa
Skill-Enhancing HR Practices . ** p Ͻ . and both paths were significant (model 6: ⌬2 ϭ 50.09 for the three HR dimensions respectively.01).01). operational outcomes (.01
. and operational outcomes partially mediated the relationships between skill-enhancing and motivation-enhancing HR dimensions and financial outcomes and fully mediated the relationship between opportunity-enhancing HR practices and financial outcomes.01 for human capital.05**
–.12** .16** . and operational outcomes were .34** Financial Outcomes R2 = .22). n. p Ͻ .01 for employee motivation). Finally.29** .26 . Lepak. and Baer
path from motivation-enhancing HR practices and operational outcomes was not significant (␤ ϭ Ϫ.01).25 .22.25).26.18). employee motivation.2012
Jiang.714.08. 18.13.47** MotivationEnhancing HR Practices
. we added the direct paths from opportunity-enhancing HR practices to voluntary turnover and operational outcomes.18 –. these results suggest
that human capital.46** . The indirect effects mediated by human capital.07** Human Capital R2 = .34. p Ͻ . In sum. The results indicate that the final model explained a moderate amount of variance in these variables. p Ͻ .43** Operational Outcomes R2 = . and .76.22 . p Ͻ . and opportunity-enhancing HR dimensions on financial outcomes were . p Ͻ .09 respectively (all p’s Ͻ . and we dropped it without impacting fit (model 5: ⌬2 ϭ 0. R2s) for structural equations predicting human capital (.e. ␤ ϭ . Figure 2 presents the standardized path estimates for the final mediating model. operational outcomes. In turn.. whereas operational outcomes were positively associated with financial outcomes (␤ ϭ . Therefore. Hu. n.05 to 13. The total effects of skill-enhancing.
08. Research Implications This research offers a number of important theoretical contributions. and so the model with the lowest AIC is the best fitting one. CFI ϭ .02) fit better than unidimensional model 7. which indicates the three-dimensional model fit the data better than the unidimensional model.03). Drawing upon the ability-motivation-opportunity model of HRM. In general. SRMR ϭ . Akaike. Because the two models (6 and 7) were not nested. operational outcomes. fit the data well (2 ϭ 406. DISCUSSION Our aim in this meta-analytic review is to contribute to strategic HRM research by exploring the
mediating mechanisms through which HR practices influence organizational outcomes. human capital theory. the AIC for model 6 (190. 2007. RMSEA ϭ . SRMR ϭ .09.g. human capital theory. First. As shown in Table 3.99. In addition. Guest. which is generally used in SEM to compare nonnested models estimated with the same data (Henson. and financial outcomes. the behavioral perspective of HRM. 2001. and were further associated with financial outcomes. Reise. Then we used an additional fit index. the three-dimensional model (model 6: RMSEA ϭ .32) was lower than that for model 7 (450. we adopt multiple theoretical perspectives on HRM to extend previous mediating models of HRM’s influence on organizational outcomes (e. CFI ϭ . but the differences in fit indexes were not great. the current study demonstrates that HRM positively relates to financial performance both by encouraging desired employee behaviors and by building a valuable human capital pool. 2005). in which HPWS has direct impact on voluntary turnover. 1998. As shown in Table 3. Delery & Shaw. we conducted a post hoc analysis to examine whether the three-dimensional model (model 6) fit the data better than a unidimensional model that treats the three HR dimensions as indicators of high-performance work systems (HPWS. The value of AIC itself does not indicate the quality of a model. the partial mediating model (model 7). we relied on indexes other than chi-square change to compare them.51). and the resource-based view. Lower values indicate a better fit. It also suggests that future research should simultaneously address the mediating roles of human capital and employee motivation so that it can provide a clearer understanding of the link-
FIGURE 3 Theoretical Model of Effects of HPWS on Organizational Outcomes
Skill-Enhancing HR Practices
MotivationEnhancing HR Practices
High Performance Work Systems
OpportunityEnhancing HR Practices
.96. Figure 3). which were in turn related to voluntary turnover and operational outcomes. & Kim. 1974). and the resource-based view of the firm. our findings demonstrated the direct relationships between skill-enhancing HR practices and motivation-enhancing HR practices and financial outcomes. Drawing upon the behavioral perspective on HRM.. only the AIC relative to that of another model is meaningful.1276
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In addition. Becker & Huselid. Kline. 1997). we proposed and found that the three dimensions of HR systems had differential relationships with human capital and employee motivation.51. Below we discuss the research and practical implications of our findings. Akaike’s information criterion (AIC.
Shaw et al.g.10**
Voluntary Turnover R2 = .67** Human Capital R2 = . but also
. 2009. Subramony. and Baer
FIGURE 4 Effects of HPWS on Organizational Outcomesa
–. whereas motivation-enhancing HR practices and opportunity-enhancing HR practices were more likely to improve employee motivation. * p Ͻ . 2009. One major contribution of this study to the strategic HRM literature is that the results suggest differential effects of the three dimensions of HR systems.08* Skill-Enhancing HR Practices .. Our findings remind researchers that different dimensions of HR systems may have unique relationships with specific organizational outcomes. Batt & Colvin. Delery & Shaw.. 1997) and revealed that the relationships between HRM and distal outcomes (e.03 . n ϭ 3.05** Financial Outcomes R2 = . 2009).g. as we expected. 2011. This result is also consistent with recent research suggesting the heterogeneous effects of the components of HR systems on organizational outcomes (e. 1995.58** MotivationEnhancing HR Practices .714. Gardner et al.. Moreover. Gittell et al. Liao et al.21**
Employee Motivation R2 = .34 . skill-enhancing HR practices were more effective in enhancing human capital. 2010) and enhancing the social capital of organizations (Collins & Clark. HR practices are not only distinct. Researchers have recently called for studies to simultaneously examine multiple outcome variables that have only been studied independently before (Lengnick-Hall et al. 2001. this study embraced the multidimensionality of performance as well as the potential for different relationships with proximal and distal outcomes. Lepak.64** OpportunityEnhancing HR Practices
–. With the help of meta-analytic techniques. which further relate to distal outcomes (Becker & Huselid. 1998.. Moreover. Gong et al. Theoretically. 2011. This is consistent with prior research suggesting that HRM can improve organizational effectives through alternative approaches such as affecting internal interaction within organizations (Evans &
Davis..g. The findings of the current study and others suggest that it is meaningful for future research to further explore other mediators of the relationship between HRM and organizational outcomes. 2005. Hu.28*
. Dyer & Reeves.15 –. For example.62** . 2009. Guest..67** High Performance Work Systems ..37** Operational Outcomes R2 = . we tested a comprehensive mediating model and provided empirical support for the theoretical proposition that HRM first relates to proximal outcomes.27 .. through human capital and employee motivation).. this finding challenges previous research.22
age between HRM and operational and financial outcomes. in which the assumption has been that all HR practices in an HR system function in the same pattern. operational and financial outcomes) could be mediated through multiple pathways (e.2012
. 2009). 2003).38
Standardized coefficients are presented.05 ** p Ͻ . This finding is important both in theory and in the methodology of measuring HR systems. there were direct relationships between skill-enhancing HR practices and motivation-enhancing HR practices and financial outcomes that could not be explained by the mediating process.
these findings offer preliminary evidence that the three HR dimensions are better viewed as three distinct but related components of HR systems rather than interchangeable indicators of HR systems. a one standard deviation increase in skillenhancing. and it encourages researchers to reconsider whether it is appropriate to utilize addition of HR practices to represent HR systems. In addition. they should consider how to appraise employees’ performance. First. it may be wise to check whether performance appraisal and compensation systems appropriately reflect employees’ contribution at work rather than training employees how to complete their work. we found that given no change in other conditions. researchers have reported that leadership and organizational culture have an important impact on employee motivation (Hartnell. Specifically. we do not deny the potential effects of recruitment. For example. we encourage organizations to maximize the return on their investment in HRM by using appropriate HR practices. Nahrgang. the results indicate that the three-dimensional model fit the data slightly better than the model combining the three HR dimensions into a unidimensional HPWS element. 2011. in order to improve employee motivation. In contrast. & Kinicki. Huselid (1995) examined the
relationship between motivation-enhancing HR practices and financial performance and reported a mean and standard deviation of 0. selection. 2005. motivation-enhancing. Any other factors that can impact the intermediate variables may affect the effects of HRM on the distal financial outcomes.. 2012. With these suggestions. researchers might categorize HR practices into the three HR dimensions and explore their main effects and interactions on organizational outcomes (e. Practical Implications Our study also offers implications for managerial practices. This reminds managers of attending to whether their HR practices improve employee skills and motivation effectively and whether other managerial initiatives can boost or undermine the effects of HR practices. Our study also indicates that organizations’ investment in HRM leads to financial outcomes through a mediating process. when organizations aim to improve employee motivation. managers may consider how these factors can complement the effects of HR practices in enhancing employee motivation. This stream of research can further verify the findings of this study and offer implications for the measurement of HR systems.g. Ilies. The findings of the differential relationships between the dimensions of HR systems and organizational outcomes also offer methodological implications for strategic HRM research. and training in enhancing employee motivation or the positive impact of performance appraisal. Instead. our finding indicates that the investment in three HR dimensions was associated with the increase in financial outcomes. Shaw et al.64 for Tobin’s Q. how to compensate for their work. however. 2009). 2007). and how to involve employees in work teams and decision making. This result suggests that organizations can obtain substantial financial benefits from investing in the three HR dimensions considered here.1278
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operate via different pathways. et al. organizations need to use HR practices to enhance both employee skills and motivation at work.. and training when enhancing employee skills.
. For example. . the results show that the three HR dimensions have differential relationships with human capital and employee motivation. Moreover. or . compensation. we encourage researchers to include all three HR dimensions in their measures of HR systems. the results of this study shed light on the ways through which managers can increase the benefits of investing in HRM. The results indicate that to retain talented employees and realize operational and financial objectives. This suggestion is consistent with previous research that argued that the measure of HR systems should be formative rather than reflective (e. such as recruitment. we encourage additional research to explore the influence of these components of HR systems to advance knowledge of the relationship between HRM and organizational outcomes.. selection. Gardner et al.13. we suggest that organizations focus more on practices. As an alternative approach. 2011). First of all. Therefore.18. Ou.09 standard deviation increase in financial outcomes.46 and 1. or opportunityenhancing HR practices was related to a . we encourage future research to compare the use of multidimensional and unidimensional models of HR systems and their effects on organizational outcomes. Jiang. For example. Moving forward. Combined. In addition. More specifically. job design. or employee involvement in developing employees’ human capital. If we apply our finding to this study.g. & Morgeson. Relatedly.. one standard deviation increase in motivation-enhancing HR practices is associated with 64 percent improvement in Tobin’s Q. how to make jobs meaningful and interesting. failure to include any dimension may compromise the overall impact of HR systems on organizational outcomes or at least lead to inaccurate results. Therefore. if all three dimensions of HR systems have unique effects on organizational outcomes..
skill-enhancing. 2011. Butts. size. Rosen.2012
Jiang. Wright. Shaw et al. First. Gerhart. 2000). like other meta-analyses testing mediating process (e. This may lead to common method bias. 2005). Guest. 1998. Lepak. However. and different job groups. Snape & Redman. we were not able to test the mediating model separately in each subgroup. Le. Schaffer.. Delery. Jayasinghe.e. Conclusions This meta-analysis examined and extended the theoretical model linking human resource management with organizational outcomes (e.. Kehoe & Wright. motivation-enhancing. 1997).. strategy) because many studies did not provide correlations with these variables. & LePine. most of the studies included in the analysis had cross-sectional designs.. in the current study we examined voluntary turnover as an intermediate outcome mediating the relationships between the three HR dimensions as well as employee human capital and motivation and financial outcomes. and Baer
Limitations and Future Research Several limitations should be noted in the current study. We encourage more empirical studies on the effects of organization-level HR systems and employee-perceived HR systems on individual outcomes. 2011. 2001. Robbins. or used for employees in general.. 2012). Subramony. potential moderators may exist in the relationships among HR dimensions and organizational outcome categories. Researchers have also suggested that HR practices applied to a specific group of employees. DeJoy. 2010. 2011. Guthrie. if a good amount of research includes all three HR dimensions while reporting the correlations of HR dimensions and organizational outcomes with interaction terms comprised of the three HR dimensions. McMahan. 2001. Gerhart. A third limitation of this study is that we were unable to explore synergy among the three HR dimensions by examining their interactions. Takeuchi et al. 2006. Future meta-analysis can explore if a longitudinal research design may influence the estimates of effect sizes and the mediating mechanisms examined in this study. a growing literature indicates that voluntary turnover may moderate the relationship between HRM and financial outcomes (e. service industry) and country moderated the relationship between HPWS and organizational outcomes (Combs et al. may influence their effects on organizational outcomes (Gerhart. which may limit conclusions regarding the direction of the mediating mechanism. 2009). Becker & Huselid. & Button. and oppor-
.g.g. 2009).g. the current meta-analysis did not include control variables in the regression models (e. Hausknecht & Trevor. However. there may be enough studies for a future meta-analysis summarizing these effects on individual outcomes.. In addition. this was impossible owing to how existing studies were measured. Future research can examine this mediating model by using samples from different industries. Scott. Jiang et al.. 2011. which might inflate the correlations between HR practices and organizational outcomes. Vandenberg. moving forward. However.g. Fifth. 2007. Colquitt. Relatedly. some studies included in this meta-analysis used informant-reported measures to evaluate HR practices and organizational outcomes from the same source. Chang. Finally. & Kuehlmann. 2007. 2009. 2009. we were not able to test the interactions between the three HR dimensions and voluntary turnover because very few studies reported the correlations between the interaction terms and the variables examined. We encourage more longitudinal studies that collect information on HR practices and organizational outcomes from different sources.. However.. & Wilson. It is worth considering the roles of both types of turnover in the mediating process rather than just focusing on voluntary turnover. We found that three dimensions of HR systems (i.. Over time. unionization.. owing to the relatively few studies in the subgroups divided by the potential moderators. recent turnover research suggests that involuntary turnover or dismissal is also influenced by HR practices and negatively related to operational and financial outcomes (Batt & Colvin. Liao et al. Delery & Shaw. We encourage scholars to explore this issue in future research. future meta-analytic review will be able to examine this. even though the synergies within HR systems have been suggested in the literature (e. & Levy. our study only focused on the relationships between HRM and organizational outcomes at the organizational level... 2011). Rabl. industry.g. Hu. 2009. Operationally.
Fourth. 2009) and on the influence of employee-perceived HR systems on individual outcomes (e. Oh.g. different countries. Second. & Snell. Shaw. The results from the current investigation should be interpreted with these limitations in mind. 1998.g. For example. Hausknecht & Trevor. in press). even though there is a growing research focus on cross-level influences of organization-level HRM on individual-level outcomes (e. recent meta-analytic reviews have reported that industry type (manufacturing industry vs.
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This article continues with an appendix. Judith C.. as well as personality factors that affect faculty-student relationships. & Allen. A. I. and human resource management practices on employee and team outcomes.
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Wright.edu) is an assistant professor of management at the Mendoza College of Business. M. M.. 2004.. Human resources and sustained competitive advantage: A resource-based perspective. and organizational performance.D.D. The human resource–firm performance relationship: Methodological and theoretical challenges. R. Holman. In D. His current research interests focus on the strategic management of human capital as well as managing contingent labor for competitive advantage. & Iverson. intellectual capital. 2003.: Wiley. Howard (Eds. 1998. CEO transformational leadership and organizational outcomes: The mediating role of human– capital-enhancing human resource management. Clegg. Journal of Management Studies. turnover. the State University of New Jersey. Journal of Managerial Issues.edu) is a doctoral candidate in the School of Management and Labor Relations at Rutgers. the State University of New Jersey. from the University of Houston. where she is a member of the Institute of Social and Psychiatric Initiatives. from the Pennsylvania State University. A. S. P. Barling. Jia (Jasmine) Hu (jhu@nd. U. Wall.K. 1999. Baer (jcbaer@ssw. Journal of Management. G. She received her Ph. M. & McWilliams.. and an associate professor of psychiatry at New York University’s Langone Medical School. Wright. 41: 335–361.rutgers. D. C. Gardner. Her primary research interests focus on understanding the effects of leadership.
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Ding and Ge (2008)
Overall financial performance
Appleyard and Brown (2001) Armstrong. extensive training Training MotivationEnhancing HR Practices Compensation contingent on performance. internal career opportunities. and Fraser (2007) Batt (2002) Batt. EscrigTena. and Keefe (2002)
Work-family assistance practices HR planning. MacCurtain. selection ratio. Colvin. and Simmering (2003) CabelloMedina. and Mkamwa (2010) Arthur (1994) Audea.2012
Jiang. Teo. and Snape (2004) Chandler and McEvoy (2000) Chen and Huang (2009) Chuang and Liao (2010) Collins and Smith (2006) Collins. participation
Return on invested assets. and Bou-Llusar (2008) Brown. training Appraisal. sharing information Participation. training Staffing. systemic selection procedures Selective staffing. compensation. Shaffer. and Stevens (2001)
Initial training. and Crawford (2005)
Team participation Voluntary turnover
Labor productivity Productivity. pay to cost of living
Batt and Colvin (2011)
BeltranMartin. development practices
Years of education and experience
. Casimir. pensions Developmental performance appraisal. training Performance management Job function Technological skills. caring
HR skill index Training hours Staffing. Hu. industrial relations Careerenhancement practices Recruitment. LopezCabrales. revenue Sales growth
Acquisition practices. Sturman. compensation. job description Human Capital Employee Motivation Organizational commitment Turnover Operational Outcomes Overall operational performance Financial Outcomes
Akhtar. Stanton. resultsoriented appraisal. Leggat. innovation
Voluntary turnover Staffing. Lepak. selfdirected teams
Job skill level
Quit rate Quit rate
Percent change in sales
Return on assets
Incentives on compensation. career development HR motivation index Outcome based pay Performance appraisal. Flood. employment security Employment security. Liu. compensation performance. Smith. & Valle-Cabrera (2011) Chan. comprehensive training
Internal mobility opportunities. equitable rewards system Compensation
Work design index Problemsolving groups. and Baer
Coding of Studies Included in the Meta-analysis
Study Ahmad and Schroeder (2003) SkillEnhancing HR Practices Selective hiring. return on equity
HR incentive index Variable pay. RocaPuig. managerial and operational skills Organizational climate Voluntary turnover Voluntary turnover
Barksdale (1994) Bartram. relative pay. cooperation Employee motivation Innovation Service performance
Market performance Firm earnings
Market performance Sale growth. Guthrie. profit sharing OpportunityEnhancing HR Practices Team and decentralization. training
Overall operational performance Total quality management Participation Involvement Customer knowledge Helping behavior Climate for trust. selfdirected teams Problemsolving groups.
training Training Group-based appraisal and performance Incentive compensation. (2011) Gelade and Ivery (2003) Gerhart and Milkovich (1990) Ghebregiorgis and Karsten (2007) Gibson. Chang. Batt. profit sharing. experience
Selective hiring. and Moynihan. performance evaluation Participation Percentage of highly educated employees Innovation
Grievance procedure. career planning. job security. information sharing meetings
Employee skills and direction
Overall operational performance
Ericksen (2006) Faems. development Compensation
Education. and Xin (2009)
Selective hiring. Chang. Law. career opportunities. performance appraisal
Team. sale Voluntary turnover Productivity
Pay and incentive Recruitment. decentralized decision making Participation
Perceived market performance Innovation Return on assets. Shaw. selfdirected teams OpportunityEnhancing HR Practices Average education Human Capital Employee Motivation Quit rate Turnover Discipline rate Operational Outcomes Financial Outcomes
Datta. salary level Motivation HR practices
Workforce alignment Participation
Voluntary turnover Voluntary turnover
Sales growth Productivity Value added
Information sharing and complaint resolution Decentralization. career development. information sharing. Guthrie. clerical accuracy Overall financial performance Return on assets. career planning. Wright. extensive training
Gong. and Ganster (2000) Den Hartog and Verburg (2004)
Voice mechanisms Autonomy. performance appraisal Employment security. performance management Pay and performance appraisal Performance based compensation. training. profit sharing. Porath.1290
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Study Colvin. selection. Jenkins. training Staffing selectivity. extensive training
Pay contingent on performance. and Chueng (2010)
Skill HR practices Staffing. return on equity
Delery. Björkman. and Pavlovskaya (2000)
Selection. collective organizational citizenship behavior Affective commitment
Overall financial performance
Participation in decision making
Overall financial performance
Training and development Training
Career management. and Maes (2005) Fey and Björkman (2001) Fey. pay contingent on performance. Sels. compensation. and Wright (2005) De Winne and Sels (2010) Delaney and Huselid (1996) Delery and Doty (1996)
Productivity Selection. De Winne. and Keefe (2005) SkillEnhancing HR Practices Variable pay. Gupta. boundary setting Participation in decision making
Customer service. Benson. job security. and Lawler (2007) Gong. complaint resolution
Overall financial performance Overall financial performance
Gardner. quality Collective affective commitment. average pay MotivationEnhancing HR Practices Problemsolving groups. internal promotion. profit sharing Pay and benefits Pay-forperformance. professional development
Empowerment HR practices Job design
Affective commitment General climate
Voluntary turnover Staff retention Customer satisfaction. internal labor market Appraisals.
Labor efficiency. organizational commitment Productivity. Cafferkey. stock. Kochan.
Voluntary turnover Volunteer turnover Innovation Overall financial performance Revenue. information sharing Human Capital Employee Motivation Work climate Turnover Operational Outcomes Productivity and service quality Voluntary turnover Labor productivity. sales growth
Human capital Employee skills practices Employee motivation practices Employee morale Training Recruitment. training and development Selection Performance Employee appraisal. outof-servicepercentage. service
Market Overall financial performance
Participation in suggestion programs Performancebased pay. return on sales
Hatch and Dyer (2004) Heffernan. selection. profit sharing Incentive compensation. and Olaverri (2006) Kirkman and Rosen (1999) Lee and Chee (1996) Staffing. return on assets. return on investment
Voluntary turnover Retention rate Productivity Overall operational performance Productivity
Guthrie (2001) Harel and Tzafrir (1999)
Recruitment. HR performance planning appraisal Group-based pay Pay level. training
Team involvement Organizational climate. Michie. sales growth rate Return on assets
. Lepak. gross operating profit Tobin’s Q. return on assets
Selection. customer service
Tobin’s Q. performance-related information. training
Benefits. teamwork Pay. information change. Harney. security. return on assets. Alonso. profit sharing
Information flow. security job design. Conway. recruitment. pay. training
Return on assets. pay level
Structured interviews. involvement. quality of goods and service Innovation Financial Outcomes Profitability
Profitability. Employee performance-based participation. return on equity. grievance procedure Voluntary turnover Employment relations SkillEnhancing HR Practices Training MotivationEnhancing HR Practices Performancebased compensation. Delery. training
Kim and Gong (2009) Kintana. Hu. internal labor market Participation. incentive Job rotation. and Baer
Study Guerrero and BarraudDidier (2004) Guest. employment tests. and Weber (1985) Kepes. equal employee opportunities. selection. value added. Tobin’s Q. and Dundon (2009) Hong (2009) Huselid (1995) Iverson and Zatzick (2011) Kalleberg and Moody (1994) Katou and Budhwar (2006) Katz. benefit OpportunityEnhancing HR Practices Teamwork. compensation. involvement
Lee and Miller (1999)
Training and education
Return on equity. quality of product Accident frequency ratio. pay contingent upon performance Compensation. and Dewe (2004) Selection tests. and Gupta (2009)
Screening test. operating ratio Non-financial performance
Return on equity
Incentive pay. team. and Sheehan (2003) Guest. training and development Compensation Reward and relations Decentralization Skills Employee relations Attitudes Employee retention Voluntary turnover Voluntary turnover
Room occupancy Productivity
Labor productivity Product. sales growth
Organizational citizenship behavior Overall operational performance Job satisfaction.
Pedersen. West. Li (2003) SkillEnhancing HR Practices Staffing. Mitsuhashi. financial performance
Performance Communication appraisal. rewards contingent upon performance Performance incentives OpportunityEnhancing HR Practices Job enrichment. job security Pay and benefit. and Lui (1998) Noble (2000) Nowicki (2001) Park. Turban. performance-based compensation Work systems index Collaborative practices
Empowerment. performance evaluation
Attitudes. sale per employee Overall financial performance
Liao and Chuang (2004)
Liao. teamwork Competence Organizational commitment Employee retention
Productivity Productivity. service quality. suggestions for improvement Employee skill Commitment Job satisfaction Voluntary turnover Employee retention
Productivity Overall operational performance Overall financial performance Sales. and Hong (2009) Liouville and Bayad (1998) Litz and Stewart (2000) LopezCabrales. POS Social performance
Service performance. motivation
Skill enhancement Selection. Fey. Toya. internal labor market Average salary Performance appraisal. quality. training and development Training Training Knowledgebased practices Selective hiring. Lau. and Stewart (2005) McClean and Collins (2011) Miah and Bird (2007) Minbaeva. training Performance appraisal. employee ownership
Job enrichment Job design. grievance procedure Proportion of university graduates Voluntary turnover Human Capital Employee Motivation Turnover Operational Outcomes Overall operational performance Financial Outcomes Market performance
Y. net profit
Performancebased pay. Fey. consultation Communication. Li (2003) Liao (2005) Staffing. compensation. training MotivationEnhancing HR Practices Group incentive. and Patterson (2005) Ngo. and Park (2003) Neal. Lau. development Career development. Chimhanzi. and Foley (2008) Ngo.1292
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Study J. and Cabrera (2009) Lui. quality Innovation. West. operating efficiency Employee effort Organizational climate Voluntary turnover Overall operational performance
Marketing effectiveness. customer satisfaction and loyalty Customer satisfaction Overall operational performance Productivity Innovation Economic performance
Labor productivity. Lau. Lepak. and Ngo (2004) MacDuffie (1995) Mavondo. speed of delivery
Profit Financial performance
. Perez-Luno. career development. and Björkman (2003) Patterson. promotion. extrinsic motivation. performance-based compensation
Organizational climate Employee relations climate Structural training and development Compensation Employee satisfaction Teams. and Wall (2004) Paul and Anantharaman (2003) Hiring. training and development Training
Return on assets. Björkman.
hiring. and Gupta (1998) SkillEnhancing HR Practices Staffing selectivity. Krause. and Takeuchi (2007) Tzafrir (2005a)
Human capital Selection. job security Employee participation
Organizational citizenship behavior Social exchange relationship
Overall operational performance Trust Overall operational performance
Veld. information sharing Decentralization. training and development Performance appraisal. Chiang. procedural justice. training and development Extensiveness of staffing. sales
Group-based performance pay. and Burns (2008) Sun. and Velella (2009) Shaw. internal labor market Evaluation. customer satisfaction Voluntary turnover Productivity Voluntary turnover
Overall financial performance Market performance
Skaggs and Youndt (2004) Snell and Youndt (1995) Stavrou (2005) Steingruber (1996) Stup (2006)
Return on equity. selection ratio. and Baer
Study Perry-Smith and Blum (2000) Rodwell and Teo (2008) Rogg. benefits Compensation Written job descriptions. Terborg. profit-sales growth Market performance
Shaw. return on equity
Job security Selection. Gupta. Wang. Fang. Lepak. career planning Employee participation. Shull. job stability Electric monitoring Quit rates MotivationEnhancing HR Practices Incentive compensation. benefits. involvement
Market share. Hu. accident rate. job definition Human capital Staffing. Delery. and Schmitt (2001) Russell. sales growth
Return on assets
Subramony. Lepak. performance appraisal. comprehensive training Training. training Performance appraisal. Jenkins. and Powers (1985) Shaw. training effectiveness Selective staffing.2012
Jiang. and Boselie (2010) Vlachos (2008) Selective hiring. compensation. return on investment Return on assets. selfdirected teams. compensation system. training Incentive compensation. information sharing Job rotation. Dineen. Norton. and Law (2007) Takeuchi. pay level
. Aryee. and Delery (2005) Shih. participation Organizational commitment Employee morale Productivity. benefits Performance appraisal Performance review Job description OpportunityEnhancing HR Practices Grievance procedures. operating ratio Revenue. autonomy. testing Training Training. formal training
Communication. performance-based reward Job design Training Training. internal labor market Performance management Compensation. and Hsu (2006) Singh (2004)
Quit rates Voluntary turnover Productivity. Paauwe. selection Performance review. incentives. selection procedures Selective staffing Average pay. communication. Schmidt. decentralized decision making Organization’s commitment to employees Employee commitment Customer service Human Capital Employee Motivation Turnover Operational Outcomes Financial Outcomes Market performance.
job security Appraisal. contingent compensation Compensation Teams. sales growth Overall financial performance
Zacharatos. job quality Planning
Human capital Human capital
Returns. Barling. compensation
Youndt (1997) Youndt and Snell (2004) Acquisition HR practices. appraisal
Overall financial performance Overall operational performance
Recruiting and selection. training
Wood. training Selection. and Allen (2005) Wright. training Egalitarian HR practices. Gardner. training
Compensation. flexible work Commitment Employee quitting. teams. developmental HR practices Selective hiring. organizational commitment Work design. and Iverson (2005) Zhu. training
Performance appraisal. and Spangler (2005)
. rewards OpportunityEnhancing HR Practices Human Capital Employee Motivation Turnover Operational Outcomes Financial Outcomes Tobin’s Q Participation Perceived organizational support. and Stride (2006) Wright. compensation. internal career opportunity
Selection. Holman. unauthorized absence Productivity. training and development
Performance appraisal. documentation HR practices Employment security. customer satisfaction Productivity. Chew. information sharing. McCormack. Moynihan. quality Profitability Productivity
Staffing. and McMahan (1999) Yang and Lin (2009)
Selection tests. Sherman. trust.1294
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Study Welbourne and Andrews (1996) White (1998) Whitener (2001) SkillEnhancing HR Practices Training MotivationEnhancing HR Practices Organizationbased rewards Incentives.