Enhancing human resource practices and firm performance: Evidence from India
Based on an article written in Journal of Management & Organization
Over the past few years, the Indian economy is witnessing an annual growth rate of 7–10% and its industrial sectors are expanding at a very fast pace in response to the increased liberalization and privatization. It is quite natural that the interests of both academicians and HR practitioners around the globe now lie in examining the kind of contemporary HRM systems that are effective in Indian organizations. Based on ability-motivation-opportunity framework, an attempt has been made by Dr. Subhash C. Kundu and his scholar, Neha Gahlawat to settle this doubt by investigating the efficacy of high performance work systems’ (HPWS) components in Indian context.
Using a sample of 563 employees from 204 organizations operating in India, Dr. Kundu and Gahlawat have reported that the adoption of ability-enhancing, motivation-enhancing, and opportunity-enhancing HR practices results in enhanced affective commitment and improved firm performance. Ability-enhancing HR practices here covered practices like training and rigorous staffing. Motivation-enhancing HR practices consisted of practices like performance-based appraisal and compensation and employee relations. Opportunity-enhancing HR practices included self-managed teams, flexible work arrangements, and empowerment. The interesting point is that magnitude of relationship with affective commitment and firm performance varied for the three subsets of high performance HR practices. Motivation-enhancing and ability-enhancing HR practices are found to be more effective in improving the firm performance than opportunity-enhancing HR practices. On the same line, ability-enhancing HR practices are far more effective in enhancing the affective commitment among employees than motivation and opportunity-enhancing HR practices.
The study has further outlined that affective commitment fully mediates the relationship between opportunity-enhancing HR practices and firm performance and partially mediates the relationships of ability-enhancing and motivation-enhancing HR practices with firm performance. It means that opportunity-enhancing HR practices only have indirect effects on firm performance through increase in affective commitment of employees whereas ability-enhancing and motivation-enhancing HR practices have both direct as well as indirect effects on firm performance.
In all, the study has offered a broader view about the type of contemporary HR practices that are successful in Indian industrial sector. The positive relationship between the contemporary HRM systems like HPWS and firm performance reflects the readiness of the organizations in India to adopt any advanced HRM system for enhancing their firm performance regardless of their diverse cultural characteristics. It is definitely in favor of the foreign firms who are planning to enter India in near future as fewer resources and efforts will be required to attune the organization’s culture and values with the outside environment.
For detailed results on the issue, please see the research article: