Human resource strategic orientation, organizational commitment and firm performance in large private manufacturing firms in Kenya.

Abstract

Although there is a growing body of evidence demonstrating the linkage between Human Resource (HR) practices and firm performance, there is less evidence on the nature of this linkage. This study sought to fill this gap by firstly, identifying, applying and analyzing in depth the soft and hard typologies of Human Resource Management. Previous studies focused on generic human resource practices as the main independent variables. Secondly, the study introduced organizational commitment and its three components of affective, continuance and normative as an employee outcome and an intermediary variable which has significant implications for firm performance. The aim of this study was to establish the relationship between the soft and ~d HR strategic orientations of human resource management, organizational commitment and its components and the moderating effect of four organizational characteristics namely: firm size, firm age, firm ownership and unionization on firm performance. The study was guided by five specific objectives that sought to establish the relationship between: human resource strategic orientation and firm performance; human resource strategic orientation and organizational commitment; organizational commitment and firm performance; the interaction effect of human resource strategic orientation and organizational commitment on firm performance and the moderating effect of organizational characteristics on the relationship between HR strategic orientation and organizational commitment and that between organizational commitment and firm performance. To achieve these objectives, twenty-six hypotheses were formulated and tested. Correlation and regression analysis techniques were applied. The study was conducted on a sample of 148 large private manufacturing firms in Kenya and a questionnaire return rate of 64 per cent was achieved. The findings indicated that, most of the independent variables have a relationship with firm performance and the variations in the dependent variable can be explained by the independent variables. Soft and hard human resource strategic orientations were found to have a strong and significant positive relationship with firm performance, affective commitment, continuance commitment and overall organization commitment. Out of the four organizational characteristics namely: firm size, firm ownership, firm age and unionization, VI only firm size and firm ownership have a consistent and significant moderating effect on the relationship between human resource strategic orientations and organizational commitment and between organizational commitment and firm performance. These results are significant for theory, policy and practice. It emerged, for example, that contrary to theoretical reasoning, hard human resource practices are positively associated with affective commitment because such practices achieve the desired results and also because people like to be associated with a winning team, they develop positive attitudes and acceptance of the concerned practices. For policy and practical implications, it is concluded that organizations should devise policies that retain employees covering all three areas of commitment, that is, affective, continuance and normative so as to realize business success