Looking into the black-box: analysis of the effectiveness of human resources strategy

Numerous studies have shown a positive relationship between Human Resources Management (HRM) and firm performance. However, in spite of the variety of studies, adopted approaches and statistical methodologies to be found, it has not been possible to clarify the exact manner and conditions under which HRM can become a source of competitive advantage. This can be explained by the fact that most empirical works have ignored mediating hypothesis and merely examined the direct relationship between High Performance Work Systems (HPWS) and firm performance. This article, attempts to gain further insights into such an analysis by integrating the two main theoretical approaches in this field: The Resource Based View (RBV) of firm and Behavioural Theory. Using a sample of 62 financial firms we examined this mediating and moderating effect of Human Capital and HR Outcomes on the HPWS – Business Performance linkage. Hierarchical Regression Analysis revealed that HPWS was positively related to firm performance, Human Capital and HR outcomes. In addition, the level of Human Capital and HR outcomes mediate the relationship between HPWS and firm performance. These results shed new light on the mechanisms through which HPWS impacts business performance.