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Strategic orientation, human

resource management practices and
organizational outcomes: evidence
from Turkey
a b c
David G. Collings , Mehmet Demirbag , Kamel Mellahi & Ekrem
d
Tatoglu
a
J.E. Cairnes School of Business and Economics , NUI Galway,
Galway, Ireland
b
Management School, The University of Sheffield , Sheffield, UK
c
Warwick Business School, The University of Warwick , Coventry,
UK
d
Chair of International Trade and Business, Faculty of Economics
and Administrative Sciences, Bahcesehir University , Istanbul,
Turkey
Published online: 20 Nov 2010.
To cite this article: David G. Collings , Mehmet Demirbag , Kamel Mellahi & Ekrem Tatoglu (2010)
Strategic orientation, human resource management practices and organizational outcomes:
evidence from Turkey, The International Journal of Human Resource Management, 21:14, 2589-2613,
DOI: 10.1080/09585192.2010.523577
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The International Journal of Human Resource Management,
Vol. 21, No. 14, November 2010, 2589–2613
Strategic orientation, human resource management practices and

organizational outcomes: evidence from Turkey
David G. Collingsa, Mehmet Demirbagb, Kamel Mellahic* and Ekrem Tatoglud
a
J.E. Cairnes School of Business and Economics, NUI Galway, Galway, Ireland; bManagement
School, The University of Sheffield, Sheffield, UK; cWarwick Business School, The University of
Warwick, Coventry, UK; dChair of International Trade and Business, Faculty of Economics and
Administrative Sciences, Bahcesehir University, Istanbul, Turkey
Based on a survey of 340 firms in Turkey, this study examines the link between human
resource management (HRM) practices and three organizational outcomes namely
employee skills and abilities, employee motivation and organizational financial
performance. The study also examines the association between the alignment of HRM
practices with the overall strategic orientation of the organization and the three
organizational outcomes. The results provide support for the contingency approach, with
HRM and strategy fit being the only variable which impacts on all three outcomes
considered. Our findings also provide some interesting insights on the applicability of
western HRM ‘best’ practices in the Turkish context.
Keywords: contingency; HRM; outcomes; performance; Turkey
Introduction
For over a decade, scholars have devoted a great deal of attention to examining the link
between human resource management (HRM) and organizational performance (Guest
1997; Wood 1999; Wright, McCormick, Sherman and McMahon 1999; Paauwe and
Boselie 2003; Bowen and Ostroff 2004; Boselie, Dietz and Boon 2005; Wall and Wood
2005). While much of the earlier research on the linkage between HRM and
organizational performance was confined to the US (Arthur 1994; Becker and Gerhart
1996; Huselid, Jackson and Schuler 1997) and the UK context (Guest and Pecceri 1994;
Patterson, West, Lawthorn and Nickell 1997; Wood and de Menezes 1998; Guest,
Michie, Conway and Sheehan 2003), more recent research has been undertaken in a
wider range of countries including inter alia, the Netherlands (Boselie, Paauwe and
Richardson 2003), Russia (Fey, Björkman and Pavlovskaya 2000), Spain (Rodriguez and
Ventura 2003), Korea (Bae and Lawler 2000), China (Björkman and Xiucheng 2002; Li
2003) and New Zealand (Guthrie 2001). However, we know relatively little about the
HRM-performance link in the context of south-eastern Europe (for an exception see
Kaya 2006). This is significant in the context of recent debates around the relevance of
cultural and institutional setting on the shaping of HRM policy and practice in
organizations (see Paauwe 2004; Paauwe and Boselie 2003). This study is an effort to
expand the current stock of knowledge on the association between a range of HRM
practices and organizational performance in a key south-eastern European country. We
chose Turkey for two main reasons. First, Turkey is an instructive case as it is currently
*Corresponding author. Email: Kamel.Mellahi@wbs.ac.uk
ISSN 0958-5192 print/ISSN 1466-4399 online

q 2010 Taylor & Francis
DOI: 10.1080/09585192.2010.523577
http://www.informaworld.com
2590 D.G. Collings et al.
at the centre of several debates due to its ongoing membership negotiations with the
European Union (EU). The characteristics of the Turkish economy and its strategic
location as a bridgehead between East and West make it an interesting case to examine
the nature of HRM practices and also to explore the HRM-performance link. Second,
Turkey is by far the largest economy in the south-eastern European region and displays a
number of characteristics which make it an interesting context to explore the HRM-
performance link.
Although there is evidence of change in the business culture environment over the
past decade (Goregenli 1997; Aycan et al. 2000; Fikret-Pasa, Kabasakal and Bodur
2001), management culture in Turkey is significantly different from that of western
European countries (Aycan 2001; Budhwar and Mellahi 2007). For instance, Turkey
consistently scores very highly on Hofstede’s (1980) dimensions of collectivism, power
distance and uncertainty avoidance. These dimensions stand in contrast to the situation in
the US and UK where much of the HRM-performance debate has its roots (Aycan et al.
2000). As Aycan (2001, p. 258) notes ‘we must bear in mind that Turkey has social,
economic, political as well as cultural characteristics which are distinct from those in
western industrialized societies’. Perhaps more significantly in the context of the current
paper, the GLOBE project identifies Turkey as below the world average in terms of
performance and future orientation and above average on in-group collectivism, power
distance and assertiveness (Kabasakal and Bodur 1998). Furthermore, Turkish firms are
characterized by centralized decision making, reliance on short term planning, highly
personalized and strong leadership combined with limited delegation (Ronen 1986;
Fikret-Pasa et al. 2001; Glaister, Dincer, Tatoglu, Demirbag and Zaim 2008). On
balance, Tanova and Nadiri (2005) argue that these and other characteristics mean that
organizations often experience difficulties in adopting new, western HRM practices.
Kaya (2006) concludes that HRM (specifically the best practice approach advocated by
Jeffrey Pfeffer) remains an emerging approach in Turkish firms and hence they remain
limited in their application and that employees are often not viewed as contributing to a
significant degree to organizational success. Apart from these, this study contributes to
the broad debate about the applicability of western management practices in non-western
context.
A number of scholars have highlighted the limitations of relying on single measures
of performance (see Guest 1997) and the over-reliance on financial performance that, in
isolation, does not capture the full impact of HRM on the overall performance of the
organization. Guest (1997) argues that scholars need to use a ‘range of types of
performance measures’ at both individual and organizational level to capture the link
between HRM and performance. In this study, we address this issue by using three
measures of organizational performance. In addition to the oft-used measure of financial
performance, we consider the employee as a key stakeholder in the enterprise and hence
look at the link between HRM and ‘employee skills and abilities’ and ‘employee
motivation and commitment’. This is in line with extant research that made a distinction
between financial, organizational and HRM-related outcomes (Dyer and Reeves 1995;
Boselie et al. 2005). Our measures of outcomes also resonate with Paauwe’s (2004,
p. 67) assertion that ‘the yardstick of human resource outcomes is not just economic
rationality’. In brief, our measures recognize the key role of employees as a stakeholder
in the organization and we recognize their motivation, skills and abilities as outcomes
in their own right. Given the multiple nature of our measures, we believe that the term
‘organizational performance’ is too narrow a concept for our study. We argue that
‘organizational outcome’ is more appropriate for our study (see Guest 1997).
The International Journal of Human Resource Management 2591
HRM and performance

Theoretically the debate on HRM and organizational performance is informed by the
resource based view (RBV) (Barney 1991; 1995). The RBV predicts that sustainable
competitive advantage can be achieved through acquiring and maintaining idiosyncratic
resources which are rare, difficult to imitate and non-substitutable (Barney 1991).
The emphasis is on achieving sustainable competitive advantage through the effective and
efficient utilization of the tangible and intangible resources available within the firm.
Human resource scholars emphasize the role of an organization’s human resources
capabilities in achieving sustainable competitive advantage (see Wright, McMahon and
McWilliams 1994; Becker and Huselid 1998) at a time when established avenues of
competitive advantage, such as quality, technology and the like, have become easier to
imitate (Becker and Huselid 1998). As Becker and Huselid (1998, p. 54) note ‘while markets
for other sources of competitive advantage become more efficient, the subtleties
surrounding the development of a high performance workforce remain a significant
unrealized opportunity for many organizations’.

There is a wide ranging literature which has attempted to elucidate the linkage between
HRM practices and organizational performance. In this regard, the extant literature can be
broadly classified as distinguishing between best practice and best fit approaches to HRM.
The former is particularly associated with Pfeffer’s (1994; 1998) influential contribution.
Pfeffer advocates a universalistic approach to HRM. His assertion is based on the notion
that a particular configuration of HRM practices can improve company profitability.
Furthermore, the impact is particularly pronounced when complementary bundles of HRM
practices are utilized together (internal fit). Finally, as the universalistic label suggests,
these assertions hold true regardless of the organizational and institutional contexts. As put
by Huselid (1995, p. 644) ‘all else being equal, the use of high performance work practices
and good internal fit should lead to positive outcomes for all types of firms’. The
underlying premise of Pfeffer’s thesis and the best practice approach more generally,
emphasizes fostering employee involvement and the human capital of the organization
more generally, while reversing the key features of Taylorism (Wood 1999). The best
practice approach also emphasizes competition through quality and productivity (Nolan
and O’Donnell 1995), and argues that HRM should focus on employees though adopting
high-cost, high-skill employment practices (Marchington and Grugulis 2000).
Pfeffer (1994) initially identified sixteen HRM practices associated with successful
organizations; however subsequently a more parsimonious list of seven practices,
developed from insights from further studies and through combining several other variables
together, has been elucidated (Pfeffer 1998, p. 76). These are, employment security –
reflecting a long term commitment by the firm to its employees; selective hiring –
emphasizing the recruitment of highly talented individuals, operationalized through
sophisticated recruitment and selection techniques; self-managed teams – as a route to
improved decision making and more innovative solutions; high compensation contingent
on organizational performance – emphasizing higher than average compensation and
performance related reward; extensive training – to ensure that selectively hired staff
remain at the forefront of their respective fields; reduction in status differential –
recognizing that all staff are valuable assets deserving to be treated equally with more
senior staff and; information sharing – suggesting a higher level of trust between workers
and management, and facilitating team working through providing employees with
information on which they can base their suggestions for improvements in business
processes. It is important to note that how these ‘best practices’ are operationalized in
different academic studies differs widely (see Marchington and Grugulis 2000; Boxall and
Macky 2009).
In contrast to the ‘best practice’ approach, the ‘best fit’ approach postulates that the
impact of HRM practices depends on the particular internal and external context in
which the organization operates (Wood 1999). Also termed the contingent school, this
approach suggests that organizations should align their HRM strategies with the firm’s
strategy and wider institutional environment (Boxall and Purcell 2008). Boxall and
Purcell (2008) identify the lineage of contingency approach of HRM theory and note
that seminal contributions such as Beer, Spector, Lawrence, Quinn-Mills and Walton
(1984) advocated the consideration of stakeholder interests and situational factors in
establishing their priorities with regard to HRM. Earlier contributions such as Schuler
and Jackson’s (1987) emphasized the positive impact on performance associated with
the mutual reinforcement between HRM and business strategy, utilizing Porter’s (1985)
typology of competitive strategy. Such an approach advocates an external or vertical fit
between a firm’s overall strategy and HRM practice. Further examples of so-called
external fit include what could broadly be termed life-cycle theory (Boxall and Purcell
2008). For example, Baird and Meshoulam (1988) emphasize the link between HRM
and the organization’s stage of development. Their core argument is that more
informal and flexible forms of HRM are most appropriate for start-up firms, while
larger and more mature firms require more professional and sophisticated forms of
HRM. Jackson and Schuler’s (1995) review supports these ideas and their work
suggests that larger firms are more likely to have more developed HRM systems and
processes. However, as Boxall and Purcell (2008) note, theoretically most studies of
external fit emphasize the linkage between HRM and strategy rather than size or life
cycle per se. There also appears to be a sectoral effect at play with the links between
HRM and competitive advantage stronger in services than in manufacturing (Boxall
and Purcell 2008). At the national level, a large body of research advocates that HRM
practices must fit the cultural and institutional contexts within which they operate
(Mendonca and Kanungo 1994; Aycan, Kanungo and Sinha 1999; Aycan et al. 2000;
Paauwe and Boselie 2007).
While it may be intuitively appealing to give more credence to the best fit approach
over the best practice alternative (Paauwe and Boselie 2007), there is ample empirical
evidence to support the latter (see Delery and Doty 1996). Although there are emerging
commonalities in the studies of the association between HRM and performance, the
findings are far from conclusive and, to date we still do not have a complete picture of the
interaction between HRM and organizational performance (Delery and Doty 1996; Wood
1999; Boselie et al. 2005; Wall and Wood 2005). Our study is intended to contribute to this
literature base and in particular to examine the linkage between HRM and individual
motivation, employee skills and organizational performance in the south-eastern European
context and specifically in Turkey.
Hypotheses development
The selection of HRM practices to be tested in this study is based on Fey et al.’s (2000) list
of HRM practices. Other studies that used the same list include Minbeava, Pedersen,
Björkman, Fey and Park (2003) and Björkman, Budhwar, Smale and Sumelius (2008). The
list is derived from an extensive and systematic review of literature on HRM practices (for
a comprehensive discussion of the process of HRM practices selection see Fey et al. 2000,
p. 3 –4). The six selected practices for these studies are ‘the top six most often studied
HRM practices’ (Fey et al. 2000, p. 3). An additional reason for selecting the six practices
is the extensive exposure they obtain in the Turkish business media and consultancy
circles (i.e., Peryön, Business Week Türkiye and HR Dergi). They are often promoted as
the best practices that Turkish firms must adopt if they are to compete in a global market.
Below we develop the hypotheses on the associations between HRM practices and
organizational performance in the Turkish context. We do this by juxtaposing the
assumptions underlying each HRM practice with the Turkish institutional environment.
Employee training
Extant research shows that organizational performance is positively associated with
employee training (Becker 1975; Tannenbaum, Mathieu, Salas and Canon-Bowers 1991;
Morris, Lydka and O’Creevy 1993; Wright, McMahon and McWilliams 1994; Sacks
1995; Lowry, Simon and Kimberley 2002). As put by Sacks (1995), training is positively
associated with positive job attitudes, and negatively associated with intentions to quit. In
addition to employee commitment, a large body of research posits that training and
development offer a means for organizations to increase individual employee skills and
performance (Russell, Terborg and Powers 1985; Delaney and Huselid 1996). Extensive
training is one of Pfeffer’s (1998) best practices and training has been used as a measure in
a number of other performance studies (see for example, Huselid 1995; MacDuffie 1995;
Fey et al. 2000). Fey et al. (2000) report that training is positively associated with
employees’ ability to carry out tasks effectively. As education levels in Turkey tend to be
relatively low (Tanova and Nadiri 2005), improving training and development is likely to
be particularly significant in enhancing both individual employee performance and
aggregate organizational performance. Reflective of this notion, Aycan’s (2001) argument
states that training and development is one of the most important functions of HRM
departments in Turkey. Despite the relatively low level of basic education and competence
which Turkish employees have to begin with, it is likely that training will have a positive
impact on employee skills and education, motivation and organizational commitment, and
organizational financial performance.
As far as the association between training and employee motivation is concerned,
extant research shows that, overall, availability of training is perceived by employees as a
signal of being valued by the organization and that the organization cares about their
development (Noe 1986), and as a result has a positive impact on job satisfaction and
motivation (Caldwell, Chatman and O’Reilly 1990; Morris et al. 1993; Bartlett 2001;
Lowry et al. 2002). We expect that the positive association between training and
motivation to hold in Turkey for two key reasons. First, given the rapid rate of change in
the Turkish economy and technological advancement, employees constantly feel the need
to upgrade their skills to hold their positions in the labor market. Second, as noted above,
training by Turkish firms may be perceived by employees as a ‘good will’ gesture by the
organization toward its employees. Aycan (2006, p. 127) notes that ‘training and
development opportunities are among the most motivating factors’ in Turkey especially
for the young workforce (Aycan and Fikret-Pasa 2003).
Finally, although a number of scholars question the impact of training on the bottom
line, arguing that training is expensive and organizations tend not to benefit from it (Salas,
Cannon-Bowers, Rhodenizer and Bowers 1999; Wright and Geroy 2001; Caudron 2002)
or that training is not linked, and should not be linked to financial performance because
organizations carry out training for reasons other than improving financial performance
(Alliger, Tannenbaum, Bennett, Traver and Shortland 1997), there is a near consensus that
training has a positive impact on organizational financial performance (cf. Black and
Lynch 1996; Garcı́a 2005; Tharenou, Saks and Moore 2007). Based on the above, we
propose that:
H1: Employee training is positively associated with (a) employee skills and abilities;
(b) employee motivation; and (c) organizational financial performance.
Competence-based performance appraisal

In practice, performance appraisal can be linked with other aspects of HRM systems such
as training and development and performance-based compensation. Effective performance
appraisal systems can facilitate the identification of individual performance levels and
individual skills gaps which can be addressed though training (Locke, Latham and Smith
1990). Thus performance appraisal emerges as a key aspect of a firm’s HRM system. Fey
et al. (2000) posit that performance based appraisal has a positive impact on employee’s
skills and abilities. They argue that competence/performance appraisal systems provide
employees with feedback that help them enhance their abilities and performance (Wright
et al. 1999; Fey et al. 2000, p. 5). Thus, we propose that competence/performance
appraisal is positively associated with employees’ skills and abilities.
Further, the higher levels of employee skills and abilities resulting from performance
appraisal identified above are likely to increase employee motivation. In this regard, there
is a growing body of literature which supports the idea that performance at the individual
level is a function of ability, motivation and opportunity (Blumberg and Pringle 1982;
Boxall and Purcell 2008). Drawing on Pinder’s (1998) definition of motivation as ‘the set
of internal and external forces that initiate work-related behaviors and determine its, form,
direction, intensity and duration’ (cited in Fey, Morgoulis, Jakoushev, Park and Björkman
2009, p. 693), Fey et al. (2009) recognize the influences of HRM practice in influencing
the motivation of employees. Similarly, social exchange theory suggests that
organizational investment in employees results in reciprocated positive work behaviors
among employees (Settoon, Bennett and Liden 1996; Cropanzano and Mitchell 2005).
This results in employees becoming prosocially motivated, that is, they desire to expend
effort to benefit the organization (Kuvass and Dysvik 2009). Hence the feedback received
through competence-based performance appraisal is likely to create a sense of competence
and accomplishment in workers (Bandura 1977; Fey et al. 2009) and hence improve
motivation.
In addition, recent studies on the association between performance appraisal and
organizational performance in non-western countries report that performance appraisal
has a positive impact on organizational performance (Katou and Budhwar 2006).
Based on the above we propose the following:
H2: Competence-based performance appraisal is positively associated with (a)
employee skills and abilities; (b) employee motivation; and (c) organizational
financial performance.
Performance-based compensation
Pfeffer (1998) identifies high reward contingent on performance as one of his best
practices. While contingency approaches would suggest a more nuanced treatment of
reward appropriate to the organization’s strategy, it is clear that reward and performance-
based compensation in particular, does offer a potential means through which
organizations can align employee behavior with organizational goals. Indeed, Delery and
Doty (1996) identify performance-based compensation as the single strongest predictor of
firm performance. Further, a large body of research (c.f. Lawler 1981; Milkovich and
Newman 1996; Fey et al. 2000) reports a positive association between performance-based
compensation and employee motivation.
However, Turkey scores below the average on performance and future orientation
(Kabasakal and Bodur 1998). Further, in high collectivist culture, one questions the impact
of performance-based compensation on employee motivation. In collectivist cultures,
employees tend to be motivated by team or organizational level compensations rather than
individually based one. Aycan (2006, p. 173) noted that in Turkey ‘rewards that single out
high performers such as selecting the “employee of the month” or presenting plaques for
superior performance are not preferred, because it is believed that this will hurt other
employee’s feeling and disturb group harmony’. Thus, at one level this suggests that these
values would lead employees to devalue performance-based compensation and hence that it
would have a limited impact on skills, abilities, motivation and organizational performance.
However the highly influential GLOBE project suggests an alternative perspective.
Javidan, House, Dorfman, Hanges and de Luque (2006, p. 902) propose a deprivation
hypothesis based on their analysis of the GLOBE data. This suggests that individuals hold
views on what should be based on their experience, i.e., they seek and value what they do not
have. In this context of performance appraisal those societies that display low levels of
performance orientation desire high levels of achievement (Javidan et al. 2006). Thus, we
propose the following hypothesis:
H3: Performance-based compensation is positively associated with (a) employee skills
and abilities; (b) employee motivation; and (c) organizational financial performance.
Merit-based promotion
Linked to performance appraisal we include merit-based promotion as an indication of the
existence of an emphasis on internal labor markets and internal career development. Guest
(1997) argues that there is a link between the availability of internal career opportunities
and organizational commitment of employees, owing to the perception that there exist
career opportunities. Emphasizing internal promotion within the firm is also likely to
engender a sense of justice and fairness among employees (Fey et al. 2000). This resonates
with Pfeffer’s (1998) call for employment security, as employees perceive a long term
future within the firm. This is particularly important in the Turkish context as the young
and educated workforce have aspirations and preferences more aligned with their western
counterparts (Aycan and Fikret-Pasa 2000). Aycan and Fikret-Pasa call for organizations
to provide more developmental opportunities for their employees. Muhittin and Ozgur
(2004) report a positive association between merit-based promotion and performance in
Turkish public firms. Merit-based promotion goes against the cultural grains in Turkey
which value seniority over merit. This is because merit-based promotion enables younger
employees to supervise and give orders to older employees. However, consistent with the
deprivation hypothesis outlined above, Turkish employees may place a high value on
merit based promotion and it may be positively associated with higher motivation. Finally,
we believe that merit-based promotion helps firms retain highly skilled employees by
promoting them within the organization. Given the above arguments regarding the link
between employees’ skills and abilities and organizational performance, we suggest that
merit-based promotion enhances firm’s financial performance. This leads to our fourth
hypothesis:
H4: An emphasis on merit-based promotion is positively associated with (a) employee

skills and abilities; (b) employee motivation; and with (c) organizational financial
performance.
Internal communication
Consistent with the commitment to reversing the key features of the Taylorism (Wood
1999), Pfeffer (1998) emphasized information sharing as a key HRM practice. He argued
that it resonated with a higher level of trust between workers and management, and
facilitated team working through providing employees with information on which they can
base their suggestions for improvements in business processes. How such practices would
play out in the Turkish context represents an interesting question. Indeed, Aycan and
Fikret-Pasa (2000) call for organizations to provide more opportunities for communication
with their employees. However, while we did note recent shifts in culture in Turkey, the
country is still classified as highly paternalistic and moderately hierarchical, and

collectivist (Aycan et al. 2000). Thus the degree to which employee communication will
have a significant impact on the outcomes we explore is questionable. However, on
balance we argue that communication with employees should have a positive impact on
motivation and organizational commitment. Similarly, potential for employees to be
involved in decision making means that communication should also have a positive impact
on employee skills and abilities. However, as such techniques are so alien to the Turkish
culture, their impact on organization performance is not clear. However, on balance we
argue they should have a positive impact on organizational financial performance.
H5: Internal communication is positively associated with (a) employee skills and
abilities; (b) employee motivation; and (c) organizational financial performance.
Employee empowerment
Similarly, employee empowerment or involving employees in decision making in
organizations and team working have been demonstrated to impact on organizational
performance (Arthur 1994; MacDuffie 1995). This is because they represent a non-
hierarchical mode of operation and may increase employee commitment to the organization
(Fey et al. 2000). Indeed, Aycan and Fikret-Pasa (2000) call for organizations to provide
more opportunities for empowerment to their employees. Thus, the increased potential for
employees to broaden their skill sets and to be involved in decision making means that
empowerment should have a positive impact on employee skills and abilities. However,
Turkish society is characterized by a high power distance with strong collectivist tendencies
(Hofstede 1980). The hierarchical social structure of Turkey emphasizes respect for
superiors whereas subordinates tend to accept their lower positions in the organizational
hierarchy. Power is gained simply by virtue of the authority inherent in the position one
holds. Given this context, Turkish managers often hesitate to delegate, or accept up-ward
influence. However, notwithstanding these challenges, we propose, in line with the GLOBE
findings (Javidan et al. 2006), that it is likely that individuals place a significant emphasis on
attaining what they do not have (deprivation hypothesis), suggesting a positive relationship
between employee empowerment and employee motivation. Finally, the limited research on
the association between empowerment and financial performance in Turkey reports that it
has a positive impact on customers’ satisfaction because empowered employees tend to take
responsibility for their actions and respond effectively to customers demands (Babakus,
Yavas, Karatepe and Avci 2003). Thus, we posit that:
H6: Employee empowerment is positively associated with (a) employee skills and
abilities; (b) employee motivation; and (c) organizational financial performance.
External alignment
Finally, we also recognize the importance of external fit of HRM policies. While previous
research has been subject to a degree of ambiguity on the linkage between external fit and
organizational performance, this ambiguity can in part be traced to the difficulty in
codifying what constitutes ‘good fit’ (Becker and Gerhart 1996). Indeed, Hilltrop (1996,
p. 630) has argued that the concept of fit with a particular strategy may have relatively little
value in the context of the high levels of dynamic and unpredictable change which
characterize the modern business environment. Thus following Fey et al. (2000) we
recognize the difficulty of objectively measuring fit and focus on the extent to which
organizations actually pursue the alignment of strategy and HRM practices. This approach
may be particularly appropriate in the Turkish context where the volatile political and
economic climate there, means that organizations may find it difficult to formulate long
term plans (Aycan 2001; Glaister et al. 2008). Nonetheless, we argue that attempts to align
HRM policies with the firm’s strategic orientation result in improved outcomes from the
firm and employees alike.
H7: The alignment of HRM policies with the overall strategic orientation of the
organization is positively associated with (a) employee skills and abilities; (b)
employee motivation; and (c) organizational financial performance.
The conceptual framework of the hypothesized relationships is delineated in Figure 1.
Outcomes
HRM practices Control variables
Employee skills
• Employee training and abilities
• Competence-based performance
appraisal • Firm age
• Performance-based compensation Employee
• Firm size
• Merit-based promotion motivation
• Internal communication • Industry
• Employee empowerment
• HRM-strategy fit Organizational
financial
performance
Figure 1. A conceptual framework.
Research methods
Sample
The sampling frame for the Turkish firms was drawn from the website of TOBB (The
Union of Chambers of Commerce, Industry, Maritime Trade and Commodity Exchanges
of Turkey; http://www.tobb.org.tr), which provides an Industrial Database that contains
approximately 40,000 firms that are registered to any of 10 Chambers of Industry,
19 Chambers of Trade and 64 Chambers of Industry and Trade in Turkey. The names and
addresses of these companies are available from the websites of these chambers, which are
linked to the website of TOBB. Within this sample frame, many very small companies of
fewer than 20 employees were excluded. This was not viewed as a serious threat to the
study as many such companies are likely to be managed entrepreneurially and so have no
recognizable HRM system. Through a random sampling selection procedure, a total of
1000 firms was generated and constituted the sampling frame for the study.
The survey questionnaire was mailed to the CEO of each company with a letter
requesting that the CEO, or his/her senior executive in charge of HRM within the
organization, should complete it. After one reminder a total of 359 questionnaires were
returned, of which 340 were usable (the remaining 19 were excluded owing to missing
data), representing an effective response rate of 34.0%, which was satisfactory, given the
confidentiality and complexity of the questionnaire. The distribution of respondents were
42.4% CEOs (e.g., chairman, general manager), 22.1% deputy general managers, 24.6%
HRM managers and 10.9% planning executives and other senior executives in charge of
HRM practices. ANOVA tests were used to examine the differences among means for the
respondent categories. No significant differences ( p. 0.1) were detected. Given the level
of responsibility of respondents, the findings provide a good reflection of senior
management’s views on HRM practices and firm performance.

The responding firms were also compared across the main characteristics of the sample
such as industry type and geographical location, and again showed no systematic
differences ( p . 0.1). The sample of 340 firms had mean number of employees of 869.
The sample is composed of relatively large firms given the scale of the Turkish economy,
with only 25.3% of the firms classified as small size (fewer than 50 employees). The
average age of sample firms is 23.97 years. The distribution of the sample in terms of the
sector of operation is as follows: industrial, automotive and electrical equipment, 10.9%;
food, textile and paper, 21.2%; metal, wood, leather and glass, 8.2%; chemical and
pharmaceuticals, 3.2%; other manufacturing, 8.8%; wholesale and retail trade, 14.4%;
computer and engineering services, 4.7%; financial services and consultancy, 9.1; hospital
and leisure services, 6.9%; and other services, 12.6%.
Operationalization of variables
All data used in the empirical analyses were from the administered questionnaire used earlier
by Fey and Björkman (2001), Minbaeva et al. (2003) and Björkman, Fey and Park (2007).
The firm performance was treated as the dependent variable. It is generally recognized
that it is difficult to select a single measure of firm performance. Previous studies have
taken either a subjective or an objective approach to measuring performance. The
subjective approach has been used extensively in empirical studies, based on executives’
perceptions of performance, having been justified by several writers. Studies by
Venkatraman (1990), Venkatraman and Ramajuman (1986), Dess and Robinson (1984),
and Geringer and Hebert (1991) have all found consistency between executives’
perceptions of performance and objective measures. Additionally, Fisher and McGowan
(1983) argue that objective measures in company accounts are flawed and are not suitable
for research purposes, while Day and Wensley (1988) suggest an absence of suitable
objective measures. Due to complexities involved, the use of multiple dimensions and
perceptual measures such as satisfaction are widely recommended (Geringer and Hebert
1991; Glaister and Buckley 1999; Arino 2003; Delios and Beamish 2004). In line with
these arguments, we developed three different performance measures, as follows:
(1) Employee skills and abilities (PERF1): Respondents were asked to indicate on
a 7-point Likert-type scale, ranging from ‘far below average’ through ‘average’ to
‘far above average’ or ‘don’t know’, how they rate the performance of their firm’s
employees relative to their major competitors on each of the following three

criteria: overall ability, job related skills and educational level. An index measure
composed of these three items captures the firm’s HRM performance in terms of
employee skills and abilities (a ¼ 0.85).
(2) Employee motivation (PERF2): Similarly, relying on a 7-point Likert-type scale an
index was also used to rate the motivation-related HRM performance of the firm’s
employees relative to the firm’s competitors on the following five items:
motivation, organizational commitment, job satisfaction, flexibility/adaptability
and work effort (a ¼ 0.91).
(3) Organizational financial performance (PERF3): Respondents were asked to
indicate on a 7-point Likert-type scale, ranging from ‘definitely worse’ through
‘about the same’ to ‘definitely better’ or ‘don’t know’, how their firm had
performed over the last three years on each of the following financial performance
criteria: profit margin growth, sales growth and profit margin (a ¼ 0.87).
The independent variables were measured as follows:

Employee training (TRAINING) was measured by two items including the number of
days of formal training managerial and non-managerial employees receive annually
(a ¼ 0.75).
Competence-based performance appraisal (PERF_APP) was measured by an index
composed of three items. The first item measures the proportion of the employees that
regularly receive a formal evaluation of their performance (in %), the second item
measures the proportion of jobs where a formal job analysis has been conducted (in per
cent), and the final item measures the proportion of new jobs for which a formal analysis of
the desired personal skills/competencies/characteristics is carried out prior to making a
selection decision (in %) (a ¼ 0.80).
Performance-based compensation (PERF_COMP) was measured by four items.
Relying on a five-point Likert scale (ranging from 1 ¼ not at all, to 5 ¼ to a large extent)
the first two items ask the respondents whether the firm uses performance-based
compensation and to what extent their compensation systems are closely connected with
the financial results of the firm. The third item captures whether pay is tied to individual
performance, and the final item measures the extent to which differences in pay across
employees in a firm represent differences in their contribution to the firm (1 ¼ not at all,
to 5 ¼ to a large extent) (a ¼ 0.68).
Merit-based promotion (MERIT_PRO) was measured by an index composed of three
items. The first two items ask the respondents to what extent upper-level vacancies are
filled from within, and whether qualified employees have the opportunity to be promoted
to positions of greater pay and/or responsibility within the firm (1 ¼ not at all, to 5 ¼ to a
large extent), while the third item measures whether the firm places a great deal of
importance on merit when making promotion decisions (1 ¼ not at all, to 5 ¼ to a large
extent) (a ¼ 0.63).
Internal communication (INT_COMM) could be defined as the extent to which
exchange of information occurs within the firm and was measured by a scale composed of
three items using five-point scales (1 ¼ not at all, to 5 ¼ to a large extent). The items
denote communication flows between (i) employees in different departments; (ii) non-
managerial employees and managerial employees; and (iii) the HRM department and the
top management team (1 ¼ not at all, to 5 ¼ to a large extent) (a ¼ 0.76).
Employee empowerment (EMPOWER) was measured by an index composed of three
five-point scale items. The first two items measure the extent to which employee input and
suggestions are highly encouraged, and are often implemented, while the third item
measures whether employees’ capabilities are viewed as the firm’s main source of
competitive advantage (1 ¼ not at all, to 5 ¼ to a large extent) (a ¼ 0.66).
HRM and strategy fit (HRM_FIT) was measured through an index consisting of three
five-point scales (1 ¼ not at all, to 5 ¼ to a large extent). Respondents were asked the
following questions: (i) to what extent do their firms make an explicit effort to align business
and HRM/personnel strategies? (ii) to what extent is the HRM/personnel department
involved in the strategic planning process? (iii) to what extent are HRM/personnel managers
viewed by those outside the function as partners in the management of the business and
agents for change? (a ¼ 0.75).
In addition to the variables discussed above, a set of three variables were included in
the model to control for possible extraneous variation:
Firm age (AGE) was included as a control variable, since firms with more business
experience have gone through a learning process concerning how to conduct business in
the Turkish context. We expect a positive relationship between firm age and HRM
outcomes as well as organizational financial performance.
Firm size (LN_SIZE) was also controlled for as large firms may allocate more
resources to the business and may tend to have more developed HRM systems and
processes. Then a positive relationship may exist between firm size, and HRM outcomes
and organizational financial performance. Firm size was measured as the logarithm of the
total number of employees in the firm.
To control for industry variations, industry dummies were created for nine industry
categories: (1) industrial, automotive and electrical equipment (IND_ELECT); (2) food,
textile and electrical equipment (FOOD_TEXT); (3) metal, wood, leather and glass
(METAL_WOOD); (4) chemical and pharmaceuticals (CHEM_PHAR); (5) other
manufacturing (OTH_MANUF); (6) wholesale and retail trade (TRADE); (7) computer
and engineering services (COMP_ENG); (8) financial services and consultancy
(FIN_CONS); and (9) hospitality and leisure services (HOSP_LEIS).
Results and discussion

Table 1 shows descriptive statistics and correlation coefficients of independent variables in
the study. The pairwise correlations do not seem to present serious multicollinearity
problems for the multivariate analysis, as none of the variables have correlation
coefficients above 0.50 (Hair, Black, Bain, Anderson and Tatham 2006).
In order to test the study’s hypotheses, a series of regression models were estimated
with the dependent variable being each of the HRM performance outcomes: employee
skills and abilities (PERF1), employee motivation (PERF2) and organizational financial
performance (PERF3). The effects of independent variables on each of the dependent
variables of PERF1, PERF2 and PERF3 are shown in Tables 2 to 4, respectively. A set of
nine models were tested for each dependent variable. As the first step, the control variables
were entered (Model 1 in Tables 2 to 4). Of these variables, the firm size (LN_SIZE) had a
positive and significant effect only on HRM performance outcome of PERF1 in all nine
models in Table 2 (p , 0.01). While the firm age (AGE) had no significant effect on any of
the performance outcomes, the industrial dummies had only modest effects.
The individual effects of the hypothesized variables were then tested in Models 2 to 8,
and all independent variables along with control variables were tested in Model 9, as
shown in Tables 2 to 4, respectively. For each of the regression models, variance inflation
factors (VIF) were examined to determine the existence of multicollinearity. None of the
Table 1. Descriptive statistics and correlation coefficients of variables.
Variable name Definition Mean S.D. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

1. TRAINING Employee training 3.16 0.83 1.00
2. PERF_APP Competence-based 0.61 0.26 2 0.01 1.00
performance appraisal
3. PERF_COMP Performance-based 3.45 0.77 0.15* 2 0.12 1.00
compensation
4. MERIT_PRO Merit-based promotion 3.93 0.68 0.03 0.26* 0.26* 1.00
5. INT_COMM Internal 3.97 0.65 0.01 0.14 0.16* 0.41* 1.00
communication
6. EMPOWER Employee 3.63 0.68 0.02 0.13 0.37* 0.33* 0.38* 1.00
empowerment
7. HRM_FIT HRM-strategy fit 3.55 0.83 0.07 0.21* 0.25* 0.22* 0.31* 0.24* 1.00
8. AGE Firm age 23.97 19.43 2 0.10 2 0.01 2 0.17* 2 0.02 2 0.06 2 0.04 0.09 1.00
9. LN_SIZE Logarithm of firm size 4.93 1.58 2 0.14 0.16* 2 0.04 0.11 0.06 0.03 0.29* 0.35* 1.00
10. IND_ELECT Industrial, automotive 0.11 0.31 2 0.03 2 0.09 0.02 2 0.05 2 0.01 0.07 0.08 0.02 2 0.03 1.00
and electrical
equipment
11. FOOD_TEXT Food, textile and paper 0.21 0.40 2 0.01 2 0.11 2 0.01 0.04 0.04 0.01 0.04 0.01 0.04 2 0.14 1.00
12. METAL_ Metal, wood, leather 0.08 0.27 2 0.03 0.02 2 0.10 0.08 0.02 2 0.02 2 0.11 2 0.01 2 0.07 2 0.11 2 0.14 1.00
WOOD and glass
13. CHEM_PHAR Chemical and 0.03 0.17 2 0.07 2 0.01 2 0.02 2 0.13 2 0.03 2 0.03 2 0.02 0.09 2 0.02 2 0.06 2 0.10 2 0.06 1.00
pharmaceuticals
14. OTH_MANUF Other manufacturing 0.09 0.28 2 0.11 2 0.04 0.03 0.03 0.09 0.07 2 0.09 0.05 2 0.03 2 0.11 2 0.16* 2 0.09 2 0.06 1.00
15. TRADE Wholesale and retail 0.14 0.35 0.11 0.10 0.10 2 0.05 0.02 2 0.09 2 0.06 2 0.14 2 0.12 2 0.14 2 0.21* 2 0.12 2 0.07 2 0.13 1.00
trade
16. COMP_ENG Computer and 0.05 0.21 0.06 0.06 0.04 0.04 2 0.08 0.11 2 0.06 2 0.09 2 0.09 2 0.08 2 0.11 2 0.07 2 0.04 2 0.07 2 0.09 1.00
engineering services
17. FIN_CONS Financial services and 0.09 0.28 0.07 0.20* 0.04 0.05 2 0.04 0.03 0.07 0.12 0.15* 2 0.11 2 0.16* 2 0.10 2 0.06 2 0.10 2 0.13 2 0.07 1.00
consultancy
18. HOSP_LEIS Hospital and leisure 0.07 0.25 0.07 2 0.01 2 0.13 2 0.05 2 0.02 2 0.09 0.02 2 0.04 2 0.03 2 0.09 2 0.14 2 0.08 2 0.05 2 0.08 2 0.11 2 0.06 2 0.09 1.00
services
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Notes: *p , 0.001 (two-tailed test). N ¼ 340.

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Table 2. Regression results (PERF1: Employee skills and abilities).
Variable name Definition Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7 Model 8 Model 9
Independent variables
TRAINING (H1a) Employee training 0.21 0.12
PERF_APP (H2a) Competence-based performance 2.99*** 1.74***
appraisal
PERF_COMP (H3a) Performance-based compensation 0.38 0.26
MERIT_PRO (H4a) Merit-based promotion 1.30*** 0.41*
INT_COMM (H5a) Internal communication 0.77* 0.17
EMPOWER (H6a) Employee empowerment 0.95*** 0.51**
HRM_FIT (H7a) HRM-strategy fit 1.20*** 1.09***
Control variables
AGE Firm age 0.01 2 0.01 0.01 0.03 0.04 0.03 0.03 0.01 0.01
LN_SIZE Logarithm of firm size 0.40*** 0.44*** 0.33*** 0.38*** 0.37*** 0.40*** 0.37*** 0.24** 0.35***
IND_ELECT Industrial, automotive and electrical 0.03 2 0.02 0.27 0.04 0.61 0.55 2 0.14 20.25 1.01
equipment
FOOD_TEXT Food, textile and paper 0.30 0.16 0.25 0.32 0.54 0.30 0.28 0.34 0.60
METAL_WOOD Metal, wood, leather and glass 0.37 0.79 0.49 0.45 0.38 0.31 0.33 0.76 1.22
D.G. Collings et al.
CHEM_PHAR Chemical and pharmaceuticals 20.54 2 0.39 2 0.29 2 0.54 0.62 2 0.46 2 0.53 20.30 0.70
OTH_MANUF Other manufacturing 0.89 0.79 0.76 0.87 1.37* 0.62 0.69 1.28* 1.68**
TRADE Wholesale and retail trade 0.63 0.44 0.52 0.56 1.12 0.69 0.68 0.87 1.38*
COMP_ENG Computer and engineering services 1.79* 1.65 1.52 1.74* 2.22** 1.46 1.37 1.75* 1.77*
FIN_CONS Financial services and consultancy 0.97 1.04 0.40 0.83 1.35* 1.30 0.81 0.93 1.14
HOSP_LEIS Hospitality and leisure services 1.49* 1.52* 1.51* 1.59* 1.79** 1.42* 1.54* 1.42* 1.96**
Intercept 12.25*** 11.34*** 10.69*** 10.94*** 6.82*** 6.75*** 8.95*** 8.65*** 3.32**
F statistic 1.78** 1.79** 3.39*** 1.77** 4.20*** 4.06*** 2.72*** 4.42*** 4.98***
R-square 0.06 0.08 0.13 0.07 0.16 0.15 0.10 0.16 0.29
Adjusted R-square 0.03 0.03 0.09 0.03 0.12 0.11 0.06 0.12 0.23
Notes: *p , 0.1; **p , 0.05; ***p , 0.01 (two-tailed test). N ¼ 340.

Table 3. Regression results (PERF2: Employee motivation).
TRAINING (H1b) Employee training 0.52 0.14
PERF_APP (H2b) Competence-based performance 0.33 0.34
appraisal
PERF_COMP (H3b) Performance-based compensation 0.42 0.32
MERIT_PRO (H4b) Merit-based promotion 3.44*** 2.24***
INT_COMM (H5b) Internal communication 3.22*** 1.74*
EMPOWER (H6b) Employee empowerment 2.18*** 1.45**
HRM_FIT (H7b) HRM-strategy fit 2.16*** 1.57***
Control variables
AGE Firm age 2 0.02 20.02 20.01 20.01 20.01 2 0.01 2 0.01 2 0.02 2 0.01
LN_SIZE Logarithm of firm size 0.33 0.35 0.20 0.32 0.16 0.28 0.26 0.05 0.09
IND_ELECT Industrial, automotive and 2 0.35 20.61 20.07 20.33 0.38 0.29 2 0.74 2 0.86 0.39
electrical equipment
FOOD_TEXT Food, textile and paper 2 0.12 20.79 20.33 20.09 20.60 2 0.33 2 0.18 2 0.14 2 1.10
METAL_WOOD Metal, wood, leather and glass 0.03 0.83 0.64 0.21 20.25 2 0.08 2 0.06 0.75 1.46
CHEM_PHAR Chemical and pharmaceuticals 2 1.28 21.24 20.78 21.26 0.83 2 1.06 2 1.25 2 0.84 0.85
OTH_MANUF Other manufacturing 1.25 0.98 1.08 1.19 1.26 0.63 0.78 1.96 1.50
TRADE Wholesale and retail trade 2 0.20 20.49 20.16 20.35 20.18 0.02 2 0.09 0.26 0.30
COMP_ENG Computer and engineering services 0.41 20.67 0.11 0.29 0.66 0.01 2 0.56 0.36 2 0.42
FIN_CONS Financial services and consultancy 2 0.29 20.08 20.75 20.44 0.06 2 0.28 2 0.67 2 0.37 2 0.61
HOSP_LEIS Hospitality and leisure services 0.80 0.57 0.84 1.04 0.48 0.69 0.92 0.69 0.59
Intercept 24.51*** 22.87*** 22.96*** 21.49*** 11.43*** 11.77*** 16.91*** 17.96*** 4.56
F statistic 0.49 0.64 0.97 0.79 5.76*** 4.65*** 2.27*** 3.19*** 5.38***
R-square 0.04 0.05 0.07 0.05 0.21 0.17 0.09 0.12 0.31
The International Journal of Human Resource Management

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Table 4. Regression results (PERF3: Organizational financial performance).
TRAINING (H1c) Employee training 1.11*** 0.85**
PERF_APP (H2c) Competence-based performance 0.65 0.16
appraisal
PERF_COMP (H3c) Performance-based compensation 1.10*** 0.88*
MERIT_PRO (H4c) Merit-based promotion 0.58 0.68
INT_COMM (H5c) Internal communication 1.03** 0.83*
EMPOWER (H6c) Employee empowerment 0.79 0.01
HRM_FIT (H7c) HRM-strategy fit 2.11*** 2.31***
Control variables
AGE Firm age 0.01 0.01 0.01 0.02 0.01 0.02 0.01 0.01 0.01
LN_SIZE Logarithm of firm size 0.39* 0.30 0.28 0.37 0.32 0.35 0.36 0.11 0.14
IND_ELECT Industrial, automotive and 0.66 0.74 0.59 0.81 0.73 0.83 0.51 0.88 0.78
electrical equipment
FOOD_TEXT Food, textile and paper 20.21 2 0.53 20.27 20.18 2 0.31 20.09 20.27 2 0.21 20.25
METAL_WOOD Metal, wood, leather and glass 1.63 1.71 1.73 1.93 1.28 1.69 1.58 2.02 2.58
D.G. Collings et al.
CHEM_PHAR Chemical and pharmaceuticals 24.01** 2 4.07** 24.78** 23.99** 2 4.45** 23.91** 24.05** 2 3.63** 24.49**
OTH_MANUF Other manufacturing 3.12** 3.09** 2.87* 3.06** 3.24** 2.93** 2.91** 3.79*** 4.21***
TRADE Wholesale and retail trade 0.73 0.38 0.56 0.52 0.97 0.77 0.75 1.19 1.61
COMP_ENG Computer and engineering 2.63 3.09 2.39 2.48 1.92 3.35* 2.23 2.65 2.84
services
FIN_CONS Financial services and consultancy 3.27** 2.88* 3.54** 3.11** 3.51** 3.75*** 3.03** 3.03** 3.56**
HOSP_LEIS Hospitality and leisure services 3.84** 3.26** 3.70** 4.15*** 3.68** 3.90*** 3.85*** 3.69*** 3.68**
Intercept 10.78*** 7.95*** 10.99*** 6.89*** 9.06*** 6.61*** 8.05*** 4.49** 3.28
F statistic 2.71*** 2.90*** 2.49*** 3.06*** 2.60*** 2.99*** 2.70*** 4.96*** 3.51***
R-square 0.10 0.13 0.11 0.12 0.11 0.12 0.11 0.18 0.24

VIF scores were above 2.9, indicating that multicollinearity is not a problem with these
data (Hair et al. 2006). The F statistics indicate that all models in Tables 2 to 4 are
significant ( p , 0.01) and hence are useful for explanation purposes.
The effects of employee training (TRAINING) on performance outcomes are shown in
Models 2 and 9 (Tables 2 to 4). No support was found for H1a and H1b regarding the effect
of TRAINING on HRM performance outcomes of employee skills and abilities (PERF1),
and employee motivation (PERF2). Some support, however, was noted for H1c
concerning the effect of TRAINING on organizational financial performance (PERF3), as
the coefficients of TRAINING are positive and significant in Model 2 ( p, 0.01) and
Model 9 ( p , 0.05) in Table 4, respectively. These findings reveal that, despite the
relatively low level of educational attainment in Turkey and the posited important of
training there (Aycan 2001), the impact of training on the outcomes considered here is
limited. While previous research has established that the proportion of employees
receiving training in Turkey is proximate to the EU average and that Turkish firms have a
systematic approach to training (Tanova and Nadiri 2005), it may be that training in these
firms is inappropriately focused. Reflective of this notion Aycan (2001) notes the
evaluation of training and development as one of the key challenges in Turkish firms.
Hence firms may not have an understanding of how effective, or indeed appropriate, their
training efforts, thus, limiting the impact on employee and financial outcomes. Thus, it
would appear that a greater emphasis on training needs analysis and improved evaluation
of training may be appropriate in the Turkish context. Nonetheless, training does have a
moderate impact on organizational financial performance.
The coefficients of competence-based performance appraisal (PERF_APP) in Models
3 and 9 in Table 2 are positive and significant ( p , 0.01) indicating that there exits strong
support for H2a with respect to the relationship between PERF_APP and PERF1. In
contrast, no support was found for H2c ( p . 0.1) in terms of the impact of PERF_APP on
PERF3, as shown in Table 4 (Models 3 and 9). However, support was found for H2b. The
finding that competence-based performance appraisal positively influences the HRM
outcome of employee skills and abilities tends to resonate with the discussion on training
above. It may be that performance appraisal is effective in identifying deficits in individual
employee’s competence, and this informs training efforts resulting in a positive impact on
employee skills and abilities. At one level the fact that hypothesis H2c was not supported
may not be completely unexpected. We established above that, Turkey scores below the
average on performance and future orientation (Kabasakal and Bodur 1998). Support for
the lack of significant association between competence-based performance appraisal and
employee motivation is expected. As noted earlier, Turkey scores quite highly on
collectivism in Hofstede’s (1980) study, and while the strength of this has declined in
recent years, Turkey remains relatively collectivist. Such an orientation is not aligned with
individual performance-related reward. Even intrinsic rewards that single out high
performers such as employee of the month programs may have limited relevance in the
Turkish context because such techniques may hurt other’s feelings or disturb group
harmony (Aycan 2001). Hence, there may be a cultural effect at play here. The Turkish
culture may not be strongly predisposed to western ideals of performance management
systems.
The effects of performance-based compensation (PERF_COMP) on performance
outcomes are shown in Models 4 and 9 (Tables 2 to 4). Both H3a and H3b are supported in
that the coefficients of PERF_COMP are not significant ( p . 0.1) indicating that there is
no relationship between performance-based compensation and the HRM performance
outcomes of employee skills and abilities, and employee motivation. Some partial support
was found for H3c, since there is only a weak level of significant relationship ( p , 0.1)
between PERF_COMP and PERF3, as shown in Models 4 and 9 in Table 4. These findings
may not be particularly surprising in the Turkish context. Aycan (2001) argued that
performance evaluation is one of the most challenging aspects of managing HR in Turkish
firms. She relates these challenges to a lack of objectivity in performance appraisals
resulting from a lack of scientific validity of the measures used to evaluate performance
and lack of training for appraisers. Further, owing to the high-power distance orientation,
performance appraisal tended to be one-way only with little opportunity for peer appraisal.
Similarly, feedback is difficult to give in the Turkish context where individual employees
get emotional when they receive negative feedback. Hence regardless of the introduction
of sophisticated performance appraisal systems, it could be argued that is unlikely that
such systems will operate effectively owing to the cultural characteristics identified above
and hence their impact on organizational performance may be limited.
As for the effects of merit-based promotion (MERIT_PRO) on performance outcomes,
while there is partial support for H4a (Models 5 and 9 in Table 2), no support was found for
H4b (Models 5 and 9 in Table 3). Further support was noted for H4c (Models 5 and 9 in
Table 4). The finding with regard to H4b is most likely related to the fact that, as noted
above, the young and educated elements of the Turkish workforce have aspiration and
preferences more aligned with their western counterparts (Aycan and Fikret-Pasa 2000). It
appears that the provision of merit-based promotion opportunities does have a positive
impact on employee motivation. However, tellingly this motivation does not translate into
employee skills and abilities or organizational financial performance. This could suggest a
lack of alignment between the promotion system and other aspects of the HRM systems in
Turkish firms.
The coefficient of internal communication (INT_COMM) on PERF1 is not significant
( p . 0.1) providing no support for H5a (Models 6 and 9 in Table 2). There is some partial
support for H5b and H5c in that the coefficients of INT_COMM are positive and
significant (Models 6 and 9 in Tables 3 and 4), which tends to confirm the view that
internal communication has a positive impact on performance outcomes of employee
motivation and organizational financial performance. At a certain level, this finding is not
surprising given the highly paternalistic and moderately hierarchical nature of the Turkish
culture (Aycan et al. 2000). Hence Turkish employees may not view communication
systems in the same way as their counterparts in western countries.
Some support was also found for H6a but not for H6b positing that employee
empowerment (EMPOWER) had a positive and significant impact on HRM performance
outcomes of employee skills and abilities, and employee motivation (Models 7 and 9 in Tables
2 and 3). In contrast, there is no support for H6c in that EMPOWER had no significant impact
on organizational financial performance, as shown in Table 4. The findings that empowerment
is positively associated with employee motivation highlights the rapid increase in
professionalism in Turkish organizations and managers’ willingness to delegate authority on
the one hand and employees desire to participate in decision making processes on the other.
Finally, the coefficients of HRM-strategy fit (HRM_FIT) on all three performance
outcomes of PERF1, PERF2 and PERF3 are positive and significant (p , 0.01) providing
strong support for H7a, H7b and H7c (Models 8 and 9 in Tables 2 to 4). This is a very
important finding and shows that regardless of the individual HRM practices deployed in
any firm the extent to which these practices are externally aligned will have the greatest
impact on employee and firm level outcomes. This provides strong support for the
contingency approach to HRM.
A summary of the findings is shown in Table 5.
Table 5. Summary of findings.
Hypothesis Variable name Degree of support

H1a TRAINING – PERF1 Not supported
H1b TRAINING – PERF2 Not supported
H1c TRAINING – PERF3 Partially supported
H2a PERF_APP – PERF1 Supported
H2b PERF_APP – PERF2 Supported
H2c PERF_APP – PERF3 Not supported
H3a PERF_COMP – PERF1 Supported
H3b PERF_COMP – PERF2 Supported
H3c PERF_COMP – PERF3 Partially supported
H4a MERIT_PRO – PERF1 Partially supported
H4b MERIT_PRO – PERF2 Not supported
H4c MERIT_PRO – PERF3 Not supported
H5a INT_COMM – PERF1 Not supported
H5b INT_COMM – PERF2 Partially supported

H5c INT_COMM – PERF3 Partially supported
H6a EMPOWER – PERF1 Partially supported
H6b EMPOWER – PERF2 Not supported
H6c EMPOWER – PERF3 Not supported
H7a HRM_FIT – PERF1 Supported
H7b HRM_FIT – PERF2 Supported
H7c HRM_FIT – PERF3 Supported
Conclusion and implications

This study provides some important insights into the HRM and performance debate as well
as to broader debates on the convergence of HRM practices globally. We begin by looking
at the former. This study provides strong support for the contingency view of HRM and
performance. The clearest implication from this study is that the only variable which
impacted strongly on all three outcomes, employee skills and abilities, employee
motivation and organizational financial performance, was HRM-strategy fit. This
highlights the importance of alignment of HRM policy and practice with the
organization’s overall strategy. Where organizations made an explicit effort to align
business and HRM strategies, involved the HRM department in the strategic planning
process and viewed HRM managers as partners in the management of the business, this
had a positive and significant impact on all three outcomes. Previous research has
suggested that the HRM function is gaining an increasingly strategic role in Turkish firms
(Ozcelik and Aydinli 2006) and our study suggests that this is likely to be an important
contributor to the success of Turkish firms. What is also noteworthy is that no individual
HRM practice had a strong impact on organizational financial performance. Only
employee training, performance-based compensation and internal communication
demonstrated any link with organizational financial performance with moderate and
weak support for the respective hypotheses.
Looking at individual level outcomes, we find that employee skills and abilities are
linked to competence-based performance appraisal (strong support for the hypothesis),
performance-based compensation (strong support), merit-based promotion (weak support)
and empowerment (moderate support). Interestingly, internal communication and
somewhat paradoxically employee training are not associated with employee skills and
abilities. The latter is perhaps explained by a lack of focus of training efforts with regard to
training needs analysis or evaluation thus limiting the impact of any intervention.
Similarly merit-based promotion, internal communication and empowerment are

linked with employee motivation. This is an interesting finding in that; while competence-
based performance appraisal has a strong association and merit-based promotion has
a moderate association with employee motivation, neither has a relationship with
organizational financial outcomes. This is difficult to explain but one could argue that
the problem may lie with the development and application of performance appraisal and
promotion systems in Turkey. Specifically, owing to the high power distance in Turkey,
performance appraisal tends to be one way (Aycan 2001), given that Turkish employees get
emotional when receiving negative performance feedback managers may be inclined to
give inflated assessments of employee performance to ease such tensions. While this may
have a positive effect on employee morale and motivation, the inaccurate rankings may
have a significant impact on the effectiveness of the systems. Furthermore, that Turkish
based firms have somewhat negative attitudes toward scientifically-based knowledge
(Aycan 2001, p. 258) the criteria which underscore the systems may be premised on
inaccurate assumptions.
A second and equally significant conclusion from this study is related to the
convergence of management practices globally. While institutional theorists would argue
that convergence on a single model of management regardless of national institutional
differences is an inevitable outcome of isomorphic tendencies (Powell and DiMaggio
1991), our findings suggest otherwise. Specifically, the lack of support for a number of the
hypotheses presented here, which were premised on empirical findings in other contexts,
could be explained in a large part by the idiosyncratic Turkish institutional and cultural
context. Many of the key characteristics of Turkish culture (e.g., low future and
performance orientation, high power distance etc.) seem at odds with the broadly western
notions of best practice HRM explored in this study. Hence our findings support Aycan’s
(2001, p. 258) assertion that ‘Turkey has social, economic, political as well as cultural
characteristics which are distinct from those in western industrialized societies. Successful
application of a particular HRM system requires a process of “adaptation”’. For Turkish
firms this means that they should be skeptical of applying western best practice approaches
to HRM without adapting them to the Turkish context. Equally managers of multinational
enterprises (MNEs) in Turkey should be cautious of introducing standardized HRM
policies and practices in their Turkish context without adaptation to host traditions.
The findings of this study also suggest a number of avenues for further study. Firstly, it
would be worthwhile to explore employee opinions of various HRM practices in the
Turkish context. This could provide some further insights on the posited reasons for the
findings of the present study outlined above. Secondly, in the context of the findings
around the questionable applicability of western HRM practices in the Turkish context, it
would be useful to explore the extent to which MNE subsidiaries in Turkey deploy
standardized HRM policies and practices vis-à-vis the extent to which these are adapted to
take account of the local context. Equally the comparison between HRM practices in
Turkish firms and MNE subsidiaries would represent an interesting contribution. It should
also be acknowledged that relying on the perceptual measurement of performance
constructs is always a problematic issue in such studies like ours. Although it is difficult to
develop objective measures, HRM scholars should be encouraged to supplement
subjective data with more objective data whenever possible. Finally, although the study is
strengthened by having CEOs and HR managers as the respondents (the most appropriate
respondents one could have for a study of this nature), it would be much more desirable to
have multiple organizational respondents rather than relying on single respondents.
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The International Journal of Human

Strategic orientation, human

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Strategic orientation, human resource management practices and

*Corresponding author. Email: Kamel.Mellahi@wbs.ac.uk

ISSN 0958-5192 print/ISSN 1466-4399 online

HRM and performance

unrealized opportunity for many organizations’.

Competence-based performance appraisal

H4: An emphasis on merit-based promotion is positively associated with (a) employee

country is still classified as highly paternalistic and moderately hierarchical, and

Figure 1. A conceptual framework.

management’s views on HRM practices and firm performance.

employees relative to their major competitors on each of the following three

The independent variables were measured as follows:

Results and discussion

Table 1. Descriptive statistics and correlation coefficients of variables.

Variable name Definition Mean S.D. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Notes: *p , 0.001 (two-tailed test). N ¼ 340.

Table 2. Regression results (PERF1: Employee skills and abilities).

Notes: *p , 0.1; **p , 0.05; ***p , 0.01 (two-tailed test). N ¼ 340.

Table 3. Regression results (PERF2: Employee motivation).

Notes: *p , 0.1; **p , 0.05; ***p , 0.01 (two-tailed test). N ¼ 340.

Table 4. Regression results (PERF3: Organizational financial performance).

Notes: *p , 0.1; **p , 0.05; ***p , 0.01 (two-tailed test). N ¼ 340.

Table 5. Summary of findings.

Hypothesis Variable name Degree of support

H5b INT_COMM – PERF2 Partially supported

Conclusion and implications

Similarly merit-based promotion, internal communication and empowerment are

A Multifirm Study,’ Journal of Occupational Psychology, 63, 245– 261.

Management Effectiveness as Determinants of Firm Performance,’ Academy of Management

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Notes: p , 0.1; p , 0.05; p , 0.01 (two-tailed test). N ¼ 340.

Notes: p , 0.1; p , 0.05; p , 0.01 (two-tailed test). N ¼ 340.

Notes: p , 0.1; p , 0.05; p , 0.01 (two-tailed test). N ¼ 340.