The HR - Performance Relationship and the Social Context of Work: The Role of Workplace Climate

There is now a substantial body of research examining the relationship between human resource management (HRM) and organisational performance. Much of this research has focused on attempting to specify "bundles" of HRM practices or HRM systems that have an identifiable effect on firm performance. These systems have often been denoted "high performance work systems" (HPWS). While researchers have consistently found a significant relationship between HRM and performance, the mechanisms that give rise to this relationship remain poorly conceptualised. Building on the work of Barney (1998), Ferris et al (1998) and Bowen and Ostroff (2004) we suggest the social context in which such practices are implemented provide the basis for specifying these transmission mechanisms. Workplace climate provides a key social context that induces high levels of effort and dynamic efficiency. Using a sample of manufacturing and ICT firms we find workplace climate significantly influences the relationship between HRM systems and performance.

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