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Relationship between HRM and Firm Performance

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Relationship between HRM and Firm Performance
Opening the Black Box of the Relationship Between HRM and Firm Performance Stockholm School of Economics in Russia Working Paper #07 - 101

OPENING THE BLACK BOX OF THE RELATIONSHIP BETWEEN HRM PRACTICES AND FIRM PERFORMANCE: A COMPARISON OF USA, FINLAND, AND RUSSIA CARL F. FEY Institute of International Business Stockholm School of Economics S-11383 Stockholm, Sweden Tel: (46-8)-736-9501 Fax: (46-8)-31-9927 Carl.Fey@hhs.se and Stockholm School of Economics Russia SERGEY MORGOULIS-JAKOUSHEV Stockholm School of Economics Russia 191186, Shvedski Per. 2 St. Petersburg, Russia Tel. +7 (812) 320 4806 Fax: +7 (812) 320 4809 Sergey.Morgoulis-Jakoushev@sseru.org HYEON JEONG PARK J. Mack Robinson College of Business Georgia State University P.O. Box 4014, Atlanta, GA 30302-4014 Tel: 404-651-2006 Fax: 404-651-2896 hjpark@gsu.edu INGMAR BJÖRKMAN Swedish School of Economics P.O. Box 479, 00101 Helsinki, Finland Tel: (358-9)-9-431-33273 58-9)-431-33273 Fax: (358-9)-9-431-33275 ingmar.bjorkman@hanken.fi

January 2007

Note: The authors appreciate the financial support from the Swedish Research Council.

Opening the Black Box of the Relationship Between HRM and Firm Performance OPENING THE BLACK BOX OF THE RELATIONSHIP BETWEEN HRM PRACTICES AND FIRM PERFORMANCE: A COMPARISON OF USA, FINLAND, AND RUSSIA

ABSTRACT This paper investigates the extent to which different human resource management practices (HRMP) work better in different countries. We also try to open up the black box between HRM practices and firm performance by considering how HRMPs affect firm performance. The study utilizes a unique data set consisting of subsidiaries of 241 companies operating in Russia, USA, and Finland. In the partial least square analysis used to examine our hypotheses, we demonstrate that different systems of HRMPs are preferable in different countries and that motivation and ability are important mediating variables in the HRMP-performance relationship.

Opening the Black Box of

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