The Role of Internal Human Resource Orchestration on Firm Performance

Abstract

The purpose of this research is to measure the mediating role of teamwork and participation (T&P) on the relationship between two human resource (HR) practices – “training and development” (T&D) and “performance appraisal” (PA) – and operational performance (OP). Employing the contingency approach, this study develops a research model that validates the assumption that appropriate internal orchestration of HR practices improves firm performance. Using AMOS, data from 157 manufacturing firms are analyzed through structural equation modeling (SEM). The results show that T&P fully mediates the relationship between T&D and OP, and partially mediates the relationship between PA and OP. This study, which provides empirical support for the importance of OP to firm effectiveness, finds that OP is positively related to financial performance (FP). The study develops a theoretical logic and empirically demonstrates that T&P is an appropriate practice for mediating the impact of T&D and PA on OP. The inclusion of T&P contributes to the theory and shows that appropriate internal orchestration of HR practices can realize effective OP and consequently greater FP of the firm.