Human resource management practices and performance of firms listed on the Nairobi securities exchange

Abstract

Most research demonstrating the link between HRMP and firm performance has focused on the private sector, yet understanding this relationship in publicly listed firms, in the Developing World setting is equally important. The role of organizational learning, employee outcomes and competitive strategy on HRMP–firm performance relationship- has not been established with the selected set of variables, yet theory has demonstrated that these variables can have an effect on firm performance. This study was motivated by the desire to fill these gaps in knowledge. The study objectives were: to establish the relationship between HRMP and firm performance; to assess the relationship between HRMP and employee outcomes; to assess the relationship between employee outcomes and firm performance; to assess the moderating effect of organizational learning in the relationship between HRMP and employee outcomes; to assess the moderating effect of competitive strategy on the relationship between employee outcomes and firm performance; to determine whether the effect of HRMP on firm performance is mediated by employee outcomes, and; to establish whether the joint effect of HRMP, employee outcomes, organizational learning and competitive strategy on firm performance is greater than the independent effect of HRMP, employee outcomes, organizational learning and competitive strategy on firm performance. The research design was cross sectional descriptive survey. Data was collected using a self-administered questionnaire, from a population of 60 NSE listed firms. The response rate was 60%. Descriptive statistics, correlation and regression techniques were used to analyze the data. The results of the study show a statistically significant relationship between HRMP and firm performance. The results also show that HRMP have a significant effect on employee outcomes. The results further show that employee outcomes do not affect firm performance. The results show that relationship between HRMP and employee outcomes is not moderated by organizational learning. The results indicate that competitive strategy moderates the relationship between employee outcomes and firm performance. The results show that the relationship between HRMP and firm performance is not mediated by employee outcomes. There was empirical evidence that the joint effect of HRMP, employee outcomes, organizational learning and competitive strategy on firm performance was greater than the independent effect of HRMP, employee outcomes, organizational learning and competitive strategy on firm performance. This study contributes to understanding of the link between HRMP and firm performance, while at the same time confirms the findings of previous studies that have found a significant link between HRMP and firm performance. The finding that employee outcomes do not mediate in the relationship between HRMP and firm performance was surprising. It was contrary to expectation and even contrary to previous studies. The study has empirically confirmed that competitive strategy moderates the relationship between employee outcomes and firm performance. The study also established that the combined effect of predictor variables on firm performance was greater than the independent effects. It was recommended that firms have to ensure that they synergistically combine various variables that they choose to use in order to attain and sustain a superior competitive advantage in their operations.