The effect of individual HR domains on financial performance: Evidence from Belgian small businesses

D Faems*, L Sels, S De Winne, J Maes

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

43 Citations (Scopus)

Abstract

The contribution of this study, which assesses the influence of HRM on financial performance, is fourfold. (1) We assess the relative contribution of different HR domains to organizational performance. By controlling for the overall HRM intensity in all analyses we try to meet one of the most striking shortcomings of 'single HR practice research', namely the neglect of the potential simultaneity that might exist with other HR practices. (2) By studying small Belgian companies, we focus on the importance of HRM for small business management. (3) Relying on bankruptcy prediction models, we optimize the conceptualization of financial performance. (4) Using structural equation modelling, we try to capture the mediating effect of operational performance on the relationship between HRM and financial performance. The analyses indicate mixed results for different HR domains with regard to their impact on operational and financial performance.

Original languageEnglish
Pages (from-to)676-700
Number of pages25
JournalInternational Journal of Human Resource Management
Volume16
Issue number5
DOIs
Publication statusPublished - 2005

Keywords

  • HRM-firm performance link
  • operational performance
  • financial performance
  • small businesses
  • HUMAN-RESOURCE MANAGEMENT
  • ORGANIZATIONAL PERFORMANCE
  • MANUFACTURING PERFORMANCE
  • PRODUCTIVITY
  • TURNOVER
  • SYSTEMS
  • IMPACT
  • FIRMS
  • PERCEPTIONS
  • VOLUNTARY

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