Business Strategy, Human Resource Management and Corporate Performance: Evidence from Small Firms in the UK and US

Abstract

There is a large and growing literature on the relationship between the use of human resource management practices on the one hand, and corporate performance on the other (see for example Appelbaum et al., 2000; Guest et al., 2000; Huselid and Becker, 1996; Ichniowski et al., 1994, 1997; Mac-Duffie, 1995; Way, 2002; Wood and de Menezes, 1998). This literature has mostly found some degree of positive association between the use of such human resource practices on the one hand and organizational outcomes and corporate performance on the other. However, the strength and significance of the associations found varies across studies. Thus the general claim from the HR literature — of a positive association between what might be termed ‘progressive’ human resource management practices on the one hand, and organizational outcomes and corporate performance on the other — is precisely that: a general claim that may not apply to any given firm, since that firm may not exhibit the specific characteristics — such as pursuing an innovating rather than cost-cutting strategy — that are found to be particularly associated with these positive outcomes.

This research was funded by the ESRC as part of their ‘Human Resource Management and Performance in Small & Medium Sized Enterprises’ project (Grant RES-000-22-1142). We would like to thank our researchers Linda Mapp and Alesha Aljeffri at the University of Birmingham and Mahsa Asil and the ‘Research Team’ at the University of Dallas. We would also like to acknowledge the support of Deans Lynch (deceased) and Whittington, and Professor John Watters, all of the University of Dallas. Finally, we are indebted to Alfred Kleinknecht and two anonymous referees for making a number of helpful suggestions.