Human Resource Management’s Effects on Firm-Level Relative Efficiency

Authors

  • CLINT CHADWICK,

  • JI-YOUNG AHN,

  • KIWOOK KWON

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    • The authors’ affiliations are, respectively, School of Business, University of Kansas, 326 Summerfield Hall, 1300 Sunnyside Ave., Lawrence, KS 66045-7601, E-mail: clint.chadwick@ku.edu; School of Business, Ewha Womans University, 11-1 Daehyun-dong Seodaemun-gu, Seoul, Korea 120-751, E-mail: jy-ahn@ewha.ac.kr; and School of Business, Konkuk University, 402 Kyungyoung Kwan, Hwayang-dong 1, Gwangjin-gu, Seoul, Korea 143-701. E-mail: kwkwon@konkuk.ac.kr. We are indebted to Gopesh Anand for insightful suggestions on our analysis.


Abstract

Using stochastic frontier production functions methodology with data from 1579 private-sector establishments, we demonstrate that HR practices are significantly associated with differences in relative firm-level efficiency. Supplemental analysis implies that this efficiency analysis is substantively different than the common approach to evaluating HRM’s relationships with firm-level labor productivity. The results suggest that HR practices’ contributions to relative firm-level efficiency are an important but heretofore overlooked factor in the relationship between HRM and firm performance.

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