Edited by Günter K. Stahl and Ingmar Björkman
Chapter 6: International Human Resource Management and Firm Performance
6 International human resource management and ﬁrm performance Jaap Paauwe and Elaine Farndale As interest has grown in the strategic dimension of human resource management (HRM), there has been an increasing desire to relate aspects of people management with ﬁrm performance. Particularly over the last decade, many popular articles and books appeared on this topic, exploring how organizations can achieve competitive advantage through their people (for a full overview, see Paauwe, 2004). In this chapter we will focus both on the HRM and ﬁrm performance relationship in general and on the speciﬁcs of the relationship in the context of multinational corporations (MNCs). We broadly take an institutional theory perspective to address issues that arise owing to the diversity of contexts in which MNCs are operating, which include diﬀerent meanings of the concept of ﬁrm performance, and potentially diﬀerent outcomes of HRM policies and practices. The starting point for much of the work in the area of HRM and ﬁrm performance was an article by Huselid (1995) which appeared in the highly acclaimed Academy of Management Journal, arguing that high performance work practices are linked with increased sales and market value per employee for the ﬁrm. Equally the work by Pfeﬀer (1994, 1998) was inﬂuential in identifying so-called ‘best practices’ in HRM argued to contribute towards achieving sustained competitive advantage. Empirical work in this area has continued on both sides of the Atlantic since (see, for example, Boselie, 2002; Fey & Björkman, 2001; Guest & Peccei, 1994;...
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