IDEAS home Printed from https://ideas.repec.org/a/bla/jomstd/v43y2006i2p319-342.html
   My bibliography  Save this article

Unravelling the HRM–Performance Link: Value‐Creating and Cost‐Increasing Effects of Small Business HRM

Author

Listed:
  • Luc Sels
  • Sophie De Winne
  • Johan Maes
  • Jeroen Delmotte
  • Dries Faems
  • Anneleen Forrier

Abstract

abstract The majority of empirical studies on the HRM–performance link report a positive story. The costs associated with the productivity rise due to high performance work practices (HPWP) have been largely neglected. The purpose of this study is to develop a conceptual framework that maps both the value‐enhancing and cost‐raising impact of HPWP. In addition, we want to pronounce upon their overall effect on financial performance. To test our model, we rely on a sample of small businesses. Understanding both performance and cost‐related effects of the implementation of HPWP is particularly valuable for small businesses since they often lack financial resources to implement HPWP and benefit less from economies of scale compared to their larger counterparts. Study results indicate that although greater use of HPWP is associated with increased productivity, this effect is offset by increased labour costs. However, we find an overall positive effect of HPWP on firm profitability.

Suggested Citation

  • Luc Sels & Sophie De Winne & Johan Maes & Jeroen Delmotte & Dries Faems & Anneleen Forrier, 2006. "Unravelling the HRM–Performance Link: Value‐Creating and Cost‐Increasing Effects of Small Business HRM," Journal of Management Studies, Wiley Blackwell, vol. 43(2), pages 319-342, March.
    • Handle: RePEc:bla:jomstd:v:43:y:2006:i:2:p:319-342
    DOI: 10.1111/j.1467-6486.2006.00592.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1467-6486.2006.00592.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1467-6486.2006.00592.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Peccei, R.E., 2004. "Human Resource Management And The Search For The Happy Workplace," ERIM Inaugural Address Series Research in Management EIA-2004-021-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam..
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Corral de Zubielqui, Graciela & Fryges, Helmut & Jones, Janice, 2019. "Social media, open innovation & HRM: Implications for performance," Technological Forecasting and Social Change, Elsevier, vol. 144(C), pages 334-347.
    2. Petra Andries & Dirk Czarnitzki, 2014. "Small firm innovation performance and employee involvement," Small Business Economics, Springer, vol. 43(1), pages 21-38, June.
    3. Murmann, Martin, 2017. "The productivity effects of worker replacement in young firms," ZEW Discussion Papers 17-010, ZEW - Leibniz Centre for European Economic Research.
    4. Li Sun & Chanchai Bunchapattanasakda, 2021. "Impact of Strength of Human Resource Management System on Perceived Organizational Support," International Journal of Business and Management, Canadian Center of Science and Education, vol. 14(3), pages 1-60, July.
    5. Ahmed Imran, Hunjra & Muhammad Irfan, Chani & Sher, Aslam & Muhammad, Azam & Kashif-Ur, Rehman, 2010. "Factors Affecting job satisfaction of employees in Pakistani banking sector," MPRA Paper 32130, University Library of Munich, Germany.
    6. Jeewhan Yoon & Kevin May & Jae H. Kang & George T. Solomon, 2019. "The impact of emotional self-management on benefit offerings and employment growth: an analysis of the fastest growing businesses in the United States," International Entrepreneurship and Management Journal, Springer, vol. 15(1), pages 175-194, March.
    7. Czarnitzki, Dirk & Thorwarth, Susanne, 2012. "Productivity effects of basic research in low-tech and high-tech industries," Research Policy, Elsevier, vol. 41(9), pages 1555-1564.
    8. Brigitte Kroon & Karina Voorde & Jules Timmers, 2013. "High performance work practices in small firms: a resource-poverty and strategic decision-making perspective," Small Business Economics, Springer, vol. 41(1), pages 71-91, June.
    9. Kaifeng Jiang & Riki Takeuchi & David P. Lepak, 2013. "Where do We Go From Here? New Perspectives on the Black Box in Strategic Human Resource Management Research," Journal of Management Studies, Wiley Blackwell, vol. 50(8), pages 1448-1480, December.
    10. Mihail, Dimitrios M. & Kloutsiniotis, Panagiotis V., 2016. "The effects of high-performance work systems on hospital employees' work-related well-being: Evidence from Greece," European Management Journal, Elsevier, vol. 34(4), pages 424-438.
    11. Łukasz Bryl, 2018. "Human Capital Orientation and Financial Performance. A Comparative Analysis of US Corporatons," Journal of Entrepreneurship, Management and Innovation, Fundacja Upowszechniająca Wiedzę i Naukę "Cognitione", vol. 14(3), pages 61-86.
    12. Pankaj C. Patel & Betty Conklin, 2012. "Perceived Labor Productivity in Small Firms—The Effects of High–Performance Work Systems and Group Culture through Employee Retention," Entrepreneurship Theory and Practice, , vol. 36(2), pages 205-235, March.
    13. Muhammed Nawaz & Muhammad Irfan Shakoor & Syed Shahzaib Pirzada, 2013. "The Professional Development of Employees in Banks of Pakistan: A comparative study of public and private banks in Punjab Pakistan," International Journal of Learning and Development, Macrothink Institute, vol. 3(5), pages 89-110, October.
    14. Adam Seth Litwin & Phillip H. Phan, 2013. "Quality over Quantity: Reexamining the Link between Entrepreneurship and Job Creation," ILR Review, Cornell University, ILR School, vol. 66(4), pages 833-873, July.
    15. Ahmed Muneeb Mehta & Muhammad Bilal Ahmad & Muhammad Ahsan Khan & Rabia Shahid, 2019. "Impact of Practices by Human Resource on Job Satisfaction of Foreign & Local Bank Employee," Journal of Social Science Studies, Macrothink Institute, vol. 6(1), pages 101-111, January.
    16. Abdul Waheed & Xiaoming Miao & Salma Waheed & Naveed Ahmad & Abdul Majeed, 2019. "How New HRM Practices, Organizational Innovation, and Innovative Climate Affect the Innovation Performance in the IT Industry: A Moderated-Mediation Analysis," Sustainability, MDPI, vol. 11(3), pages 1-21, January.
    17. Iryna Alves & Sofia M. Lourenço, 2022. "The use of non-financial performance measures for managerial compensation: evidence from SMEs," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 33(2), pages 151-187, June.
    18. Pittino, Daniel & Visintin, Francesca & Lenger, Tamara & Sternad, Dietmar, 2016. "Are high performance work practices really necessary in family SMEs? An analysis of the impact on employee retention," Journal of Family Business Strategy, Elsevier, vol. 7(2), pages 75-89.
    19. Nason, Robert S. & Wiklund, Johan & McKelvie, Alexander & Hitt, Michael & Yu, Wei, 2019. "Orchestrating boundaries: The effect of R&D boundary permeability on new venture growth," Journal of Business Venturing, Elsevier, vol. 34(1), pages 63-79.
    20. Gabriela ÞUÞUEANU & Elena Claudia ªERBAN, 2014. "High Performance Activity Practices in Small Firms in Romania," Economia. Seria Management, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 17(2), pages 290-303, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. David Guest & Christopher Woodrow, 2012. "Exploring the Boundaries of Human Resource Managers’ Responsibilities," Journal of Business Ethics, Springer, vol. 111(1), pages 109-119, November.
    2. Arustei Carmen Claudia, 2015. "Hrm - Well-Being At Work Relation. A Case Study," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 4, pages 140-145, August.
    3. Jaap Paauwe, 2009. "HRM and Performance: Achievements, Methodological Issues and Prospects," Journal of Management Studies, Wiley Blackwell, vol. 46(1), pages 129-142, January.
    4. AttaUllah & Zeeshan Javed & SaifUllah & Muhammad Sheraz & Prof. Dr. Anwar Irshad Burney, 2018. "The Impact of Human Capital Well-being on the Work Performance and Organizational Productivity," KASBIT Business Journals (KBJ), Khadim Ali Shah Bukhari Institute of Technology (KASBIT), vol. 11(1), pages 34-56, December.
    5. Simona Šarotar Žižek & Sonja Treven & Vesna Čančer, 2015. "Employees in Slovenia and Their Psychological Well-Being Based on Ryff’s Model of Psychological Well-Being," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 121(2), pages 483-502, April.
    6. Kilroy, Steven & Bosak, Janine & Flood, Patrick C. & Peccei, Riccardo, 2020. "Time to recover: The moderating role of psychological detachment in the link between perceptions of high-involvement work practices and burnout," Journal of Business Research, Elsevier, vol. 108(C), pages 52-61.
    7. Egidio Riva & Mario Lucchini, 2018. "Firm performance: taxonomy of European companies using self-organizing maps," Quality & Quantity: International Journal of Methodology, Springer, vol. 52(1), pages 457-477, January.
    8. Pagán-Castaño, E. & Maseda-Moreno, A. & Santos-Rojo, C., 2020. "Wellbeing in work environments," Journal of Business Research, Elsevier, vol. 115(C), pages 469-474.
    9. Flamini, Giulia & Pittino, Daniel & Visintin, Francesca, 2022. "Family leadership, family involvement and mutuality HRM practices in family SMEs," Journal of Family Business Strategy, Elsevier, vol. 13(2).
    10. Esther Villajos & Núria Tordera & José M. Peiró, 2019. "Human Resource Practices, Eudaimonic Well-Being, and Creative Performance: The Mediating Role of Idiosyncratic Deals for Sustainable Human Resource Management," Sustainability, MDPI, vol. 11(24), pages 1-20, December.
    11. Naval Garg & Bhajan Lal, 2015. "Exploring the Linkage between Awareness and Perception of High-performance Work Practices with Employee Well-being at Workplace: A New Dimension for HRM," Jindal Journal of Business Research, , vol. 4(1-2), pages 81-100, June.
    12. Kloutsiniotis, Panagiotis V. & Mihail, Dimitrios M., 2020. "Is it worth it? Linking perceived high-performance work systems and emotional exhaustion: The mediating role of job demands and job resources," European Management Journal, Elsevier, vol. 38(4), pages 565-579.
    13. Dolors Celma & Esther Martínez‐Garcia & Germà Coenders, 2014. "Corporate Social Responsibility in Human Resource Management: An analysis of common practices and their determinants in Spain," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 21(2), pages 82-99, March.
    14. Rene Fahr, 2011. "Job Design and Job Satisfaction – Empirical Evidence for Germany?," management revue - Socio-Economic Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 22(1), pages 28-46.
    15. Paul Boselie, 2010. "High performance work practices in the health care sector: a Dutch case study," International Journal of Manpower, Emerald Group Publishing Limited, vol. 31(1), pages 42-58, March.
    16. Diletta Gazzaroli & Caterina Gozzoli, 2021. "Pending Issues on Professionals’ Well-Being: The Living and Working Together in Organization Perspective," Sustainability, MDPI, vol. 13(12), pages 1-15, June.
    17. Yarid Ayala & José Ma. Peiró Silla & Núria Tordera & Laura Lorente & Jesús Yeves, 2017. "Job Satisfaction and Innovative Performance in Young Spanish Employees: Testing New Patterns in the Happy-Productive Worker Thesis—A Discriminant Study," Journal of Happiness Studies, Springer, vol. 18(5), pages 1377-1401, October.
    18. Vakkayil, Jacob & Torre, Edoardo Della & Giangreco, Antonio, 2017. "“It's not how it looks!” Exploring managerial perspectives on employee wellbeing," European Management Journal, Elsevier, vol. 35(4), pages 548-562.
    19. Liesbeth Adriaenssens & Peggy De Prins & Daniël Vloeberghs, 2006. "Work Experience, Work Stress and HRM at the University," management revue - Socio-Economic Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 17(3), pages 344-363.
    20. Esther Pagán-Castaño & Javier Sánchez-García & Fernando J. Garrigos-Simon & María Guijarro-García, 2021. "The Influence of Management on Teacher Well-Being and the Development of Sustainable Schools," Sustainability, MDPI, vol. 13(5), pages 1-23, March.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jomstd:v:43:y:2006:i:2:p:319-342. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0022-2380 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.