Review of Public Personnel Administration 2014, Vol. 34(2) 174 –195
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Does Leadership Style Make a Difference? Linking HRM, Job Satisfaction, and Organizational Performance
Brenda Vermeeren1, Ben Kuipers1, and Bram Steijn1
Abstract With the rise of New Public Management, public organizations are confronted with a growing need to demonstrate efficiency and cost-effectiveness. In this study, we examine the relationship between public organizational performance and human resource management (HRM). Specifically, we focus on job satisfaction as a possible mediating variable between organizational performance and HRM, and on the influence of a supervisor’s leadership style on the implementation of Human Resource (HR) practices. Drawing on a secondary analysis of data from a national survey incorporating the views of 6,253 employees of Dutch municipalities, we tested our hypotheses using structural equation modeling. The findings indicate that (a) job satisfaction acts as a mediating variable in the relationship between HRM and organizational performance and (b) a stimulating leadership style has a positive effect on the amount of HR practices used, whereas (c) a correcting leadership style has no effect on the amount of HR practices used.
Keywords HRM, leadership style, job satisfaction, organizational performance, public sector, Dutch municipalities
During the last three decades, public sector performance has become an increasingly important issue. With the rise of New Public Management, targets, performance, and
1Erasmus University Rotterdam, The Netherlands
Corresponding Author: Brenda Vermeeren, Erasmus University Rotterdam, Room M7-13, P.O. Box 1738, 3000 DR, Rotterdam, The Netherlands. Email: [email protected]
510853 ROP34210.1177/0734371X13510853Review of Public Personnel AdministrationVermeeren et al. research-article2013
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a more business-oriented management approach have come to play central roles within the public sector (Boyne, Meier, O’Toole, & Walker, 2006; Osborne & Gaebler, 1992; Pollitt & Bouckaert, 2004). Several innovations in the field promised to increase the quality of public service while reducing its costs. However, research into human resource management’s (HRM) contributions to these developments in the public sec- tor has been scarce (Boyne, Poole, & Jenkins, 1999; Gould-Williams, 2003). This neglect persists despite the fact that employees (those who deliver public services) are crucial to achieving superior public performance. High-quality services require highly qualified and motivated personnel (Batt, 2002).
Based on numerous studies in the private sector, we can conclude that human resource (HR) practices and organizational performance are at least weakly related (Boselie, Dietz, & Boon, 2005; Guest, 2011; Paauwe, 2009). However, research com- paring HRM in the public and private sectors suggests that the HR policies and prac- tices in these sectors differ in many important areas (Boyne et al., 1999). In particular, public organizations are more likely than private organizations to engage in activities associated with the role of model employer. Such activities imply commitment to staff training, trade union, and workforce participation in decision making, promotion of equal opportunities, and a concern for the welfare of employees to meet their personal and family needs. Given these empirical findings, we cannot simply assume that the relationship between HRM and performance will be the same in the public sector.
In private sector–based research on HRM and performance, the assumption is that an underlying causal link that runs through employee outcomes (in the form of employee attitudes and behavior) connects HR practices with organizational perfor- mance (Boselie et al., 2005; Guest, 2002; Paauwe & Richardson, 1997). In other words, HR practices are implemented to influence employees, with the ultimate aim to positively influence the organization’s performance. Job satisfaction is conceptualized as one of the key indicators of employee outcomes in HRM and performance research (Guest, 2002; Purcell & Hutchinson, 2007). Previous research has demonstrated a positive relationship between HRM and job satisfaction (e.g., Guest, 2002; Steijn, 2004) and between job satisfaction and performance (e.g., Hackman & Oldham, 1975; Judge, Thoresen, Bono, & Patton, 2001; Taris & Schreurs, 2009). These findings sup- port the idea that job satisfaction acts as a mediating variable in the relationship between HRM and performance. At this time, only a few studies have examined that mediating relationship (e.g., Ahmad & Schroeder, 2003; Gelade & Ivery, 2003), but more research is needed to understand how HRM and organizational performance are related. Such research is even more important in the context of the public sector, as previous research showed differences in job satisfaction between public and private sector employees (DeSantis & Durst, 1996).
In general, in the HRM literature is stated that the HR practices perceived or expe- rienced by employees will be those enacted by their supervisors (Bowen & Ostroff, 2004; Paauwe, 2009; Purcell & Hutchinson, 2007; Wright, Gardner, Moynihan, & Allen, 2005). To influence employee outcomes positively, supervisors require well- designed HR practices for use in their management activities. Den Hartog, Boselie, and Paauwe (2004) stressed the important role that supervisors play in implementing
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an intended HRM policy, as differences in implementation at this level may be attrib- utable to supervisors’ different leadership styles. Such differences in implementation and communication may lead to variation in employees’ HR perceptions. However, scholars have uncovered little empirical evidence that bears on the role of supervisors’ leadership styles in HRM implementation. Focusing on leadership style can provide additional insight into how supervisors influence the implementation of HR practices.
This study adds to prior research in three ways. First, we focus specifically on the relationship between HRM and organizational performance in the public sector. Second, we test whether job satisfaction acts within a public context as a mediator between HRM and organizational performance. Third, we focus on the influence of a supervisor’s leadership style on the implementation of HR practices. Thus, our main research question is as follows:
Research Question: To what extent is the relationship between HRM and the per- formance of public organizations mediated by job satisfaction and what is the influ- ence of a supervisor’s leadership style on the implementation of HR practices?
After a theoretical exploration of the literature on HRM, job satisfaction, organiza- tional performance, and leadership, we will formulate several hypotheses and test them using survey data from 6,253 employees of Dutch municipalities. We perform these tests using structural equation modeling (SEM). We will then discuss our find- ings. Finally, we conclude by describing suggestions for future research and implica- tions for theory and practice.
The increased focus on performance in the public sector has encouraged a large amount of research (Boyne et al., 2006; Halachmi & Bouckaert, 1996). In particular, the impact of management on performance in public organizations has been frequently studied (Meier, O’Toole, Boyne, & Walker, 2007; Nicholson-Crotty & O’Toole, 2004). The O’Toole and Meier (1999) model of management is well known and has often been used to test the impact managers may have on the performance of public organi- zations. In one of their articles, O’Toole and Meier (2008) focused on the internal side of management and, in particular, on the contribution of “the human side” of public organizations to organizational performance in public education. Their results indicate that the power of HRM in attracting and developing an organization’s human capital is important to organizational performance. Gould-Williams (2003), in turn, examined the relationship between HRM and performance in local government in the United Kingdom. He found, the more HR practices are used within an organization, the greater the impact on organizational performance. In both articles, the authors stated that more research is needed to explore the relationship between HRM and organiza- tional performance in the public sector.
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As the existing literature has paid little attention to the relationship between HRM and performance in a public context, we must turn to the general HRM literature to get more insight. However, that literature contains a very diverse array of theoretical per- spectives, definitions, measurements, methodologies, and research fields (Boselie et al., 2005). Nevertheless, following Paauwe (2009), we can conclude that there is at least a weak relationship between HR practices and organizational performance. Yet, despite the fact that several studies indicate a link between HRM and performance, significant challenges to a full understanding of this relationship still exist (Boselie et al., 2005; Bowen & Ostroff, 2004; Guest, 2011; Paauwe, 2009).
In this study, we adopt a micro approach to HRM. This approach reflects a more operational view of HRM by focusing specifically on the effect of multiple HR prac- tices on individuals (Wright & Boswell, 2002). By using this micro approach, we attempt to acquire more insight into the impact of multiple HR practices on individuals (measured through job satisfaction) and, subsequently, on organizational performance. By focusing on job satisfaction as a mediating factor, our aim is to generate a better understanding of what takes place between HRM and performance. Furthermore, scholars frequently identify the leadership style of supervisors (who are increasingly charged with implementing HR practices) as a variable essential to a better under- standing of the relationship between HRM and performance (Bowen & Ostroff, 2004; Paauwe, 2009; Purcell & Hutchinson, 2007; Wright et al., 2005). In this respect, Purcell and Hutchinson (2007) used the term “people management” to mark the dis- tinction between a supervisor’s leadership style and the application of HR practices. This distinction is based on the assumption that supervisors require well-designed HR practices to use in their people management activities and that their leadership style will influence the way they enact these practices.
The Mediating Role of Job Satisfaction
Guest stated in 1999 that, given the growing interest in research on the relationship between HRM and performance, a focus on workers’ viewpoints has become increas- ingly important. An analysis of 104 articles by Boselie et al. (2005) confirms Guest’s impression that the linking mechanisms between HRM and performance have largely been disregarded. To understand how HR practices influence employees and improve worker performance in ways that are beneficial to the organization, research is required that concentrates on employee perceptions of HR practices and establishes relation- ships between their job satisfaction and organizational performance, to take one exam- ple (Purcell & Hutchinson, 2007). One model that takes this focus is the Paauwe and Richardson (1997) model on HRM, HRM outcomes and organizational performance. In this model, the first element consists of HR practices such as recruitment, rewards, and employee participation. This element influences the so-called HRM outcomes, such as job satisfaction and motivation. Both of these elements affect the third ele- ment, organizational performance, which involves performance indicators related to the effectiveness, quality, and efficiency of the organization.
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A variety of studies have examined separate parts of this model. Focusing specifi- cally on the public sector, a number of studies have explored the relationship between HRM (Element 1) and HRM outcomes (Element 2; for example, Gould-Williams, 2004; Steijn, 2004) and between HRM outcomes (Element 2) and organizational per- formance (Element 3; for example, Kim, 2005; Ostroff, 1992). The model by Paauwe and Richardson (1997) adds to this research through its explicit focus on the mediating effect of HRM outcomes on the relationship between HRM and organizational perfor- mance. Moreover, the Paauwe and Richardson model adds to existing public sector research by promoting an explicit concentration on the concept of HRM itself. This concentration marks an important difference with the aforementioned management model by O’Toole and Meier (2008). Therefore, we use the Paauwe and Richardson model as the starting point for our research. However, while that model offers an exhaustive range of options to consider for each element, we limit ourselves to job satisfaction as the only included HRM outcome.
The introduction of job satisfaction enables us to refine the relationship between HRM and organizational performance. To a large extent, positive employee outcomes depend on employees’ perceptions of how much the organization cares about their well-being and values their contributions (Gould-Williams, 2007; Vermeeren, Kuipers, & Steijn, 2011). In this respect, the degree of job satisfaction will depend on the fulfill- ment of employee’s needs and values (Hackman & Oldham, 1975). To increase orga- nizational performance, it is likely important that the organization must not only meet the needs of customers, but also meet those of employees (Schneider & Bowen, 1993). This assertion is based on the assumption that if organizations care for their employ- ees, these employees will care for the organization (and their customers). In other words, this argument is based on the assumption that a happy worker is a productive worker (Taris & Schreurs, 2009). In this respect, the degree to which HR practices are introduced can be conceptualized as a marker of the extent to which an organization values and cares for employees. As noted above, previous research has demonstrated a positive relationship between HRM and job satisfaction (e.g., Guest, 2002; Steijn, 2004) and between job satisfaction and performance (Hackman & Oldham, 1975; Judge et al., 2001; Taris & Schreurs, 2009).1 These findings support the idea that job satisfaction acts as a mediating variable in the relationship between HRM and perfor- mance. However, this relationship is mostly studied in separate parts and seldom examined within one design. We will therefore study the relationships among HRM, job satisfaction, and organizational performance in one model. Following this plan, our first hypothesis is as follows:
Hypothesis 1: Job satisfaction acts as a mediating variable in the relationship between HRM and organizational performance.
The Role of Leadership Style
For many years, HRM and leadership were separate research areas. Gradually, interest in combining these two areas has grown. The connection between these areas is based
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on the proposition that employees are likely to be influenced by the HR practices they experience and their supervisor’s leadership style (Purcell & Hutchinson, 2007). Supervisors need HR practices to support their management activities, and the way supervisors enact these practices is influenced by their leadership style. However, pre- vious research on the relationship between HRM and performance paid little attention to supervisors’ leadership styles. One of the few studies that did attend to leadership style demonstrated that leadership and employee satisfaction with HR practices have a strong and independent impact on such employee attitudes as job satisfaction and commitment (Purcell & Hutchinson, 2007).
However, this demonstration does not allow us to say much about the influence of different leadership styles on the use of HR practices within an organization. It is appropriate to assume a relationship exists between different leadership styles and HRM, because the choice of which HR practices to use appears to be linked to leader- ship style. For example, Zhu, Chew, and Spangler (2005) have shown that transforma- tional leaders influence organizational outcomes by their use of “human-capital-enhancing HRM.” Human-capital-enhancing HRM is defined as an approach to managing people that achieves competitive advantage through the strategic development of a highly committed and capable workforce (Zhu et al., 2005). Their assumption is that transfor- mational leaders possess a clear vision of what the organization will be, and what it will do, in the future. HRM plays a critical role in the communication process between leaders and employees, because without such HRM activities as staffing and training the leader’s vision will not be transmitted effectively.
Today, scholars in the field of leadership research use many and varied conceptual- izations of leadership. Despite differences among these conceptualizations, we can detect a certain commonality. This commonality is not of jargon, but of the ideas that underpin the language used. Many conceptualizations are based on a distinction between an internally and intrinsically directed, people-oriented, and stimulating lead- ership style versus an externally and extrinsically directed, task-oriented and correct- ing leadership style (Howell & Avolio, 1993). For example, this distinction underpins the differentiation made between transformational versus transactional leadership (Bass & Avolio, 1994) and participative versus authoritive leadership (Likert, 1961). With respect to the relationship between leadership style and HRM, Guest (1987) has argued that a more correcting leadership style could be linked to hard HRM and that a more stimulating leadership style could be linked to soft HRM. In his research, he refers to the classic distinction in McGregor (1960) between theory X and theory Y. The “hard” version of HRM is widely acknowledged to place little emphasis on work- ers’ concerns. In contrast, “soft” HRM would be more likely to pay attention to work- ers’ outcomes (Guest, 1987).
We will also use McGregor’s distinction between theory X and theory Y. This dis- tinction, despite frequent criticism (Bobic & Davis, 2003), still remains useful for distinguishing between the different leadership styles a supervisor can adopt. Theory X assumes that employees are not self-motivated and will avoid work if possible. Employees, therefore, must be closely supervised and corrected when necessary. Employees are seen as factors in the production process. Theory Y, in contrast, assumes
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that employees are ambitious and self-motivated and can play a crucial role within the organization. Supervisors must ensure that their employees are properly stimulated by paying attention to their values and needs. It is in this context that Guest (1999) stated that if more HR practices are used, the impact on workers will be larger. Based on the idea that an HRM system should be designed to meet employees’ needs for skills and motivation and provide them with the opportunity to profile themselves to improve their performance (Appelbaum, Bailey, Berg, & Kalleberg, 2000), we would expect that a stimulating leadership style (theory Y) would be accompanied by the use of a greater number of HR practices tailored to invest in employees and meet their needs than would be the case for a correcting leadership style (theory X), in which employ- ees are seen as factors in the production process. This leads us to our second hypoth- esis, which consists of two separate parts:
Hypothesis 2a: A stimulating leadership style has a positive effect on the amount of HR practices used within an organization.
Hypothesis 2b: A correcting leadership style has a negative effect on the amount of HR practices used within an organization.
Figure 1 shows the overall theoretical model representing the hypotheses thus developed above. In the following sections, we present the methodology for testing this model and our empirical results.
A quantitative study was carried out to address our research question. This section describes the data and the measurement procedure, including the results of a confirma- tory factor analysis using AMOS version 16.
Figure 1. Conceptual model.
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To test our hypotheses about the direct and indirect relationships between the variables we apply a quantitative research design. For our analysis, we used data from a Dutch national survey on well-being among municipal employees. In 2005, a public sector organization representing municipalities approached 29,626 employees of Dutch municipalities in all functional areas (e.g., administrative, sociocultural, legal and information and communication technology functions), asking them to fill out a ques- tionnaire about employee well-being via Internet or mail. Of these employees, 7,918 respondents participated in the research. The respondents with missing data for the analyzed variables were removed from the sample, which resulted in a file with 6,253 respondents. The data for the resulting sample are as follows: 58% are male, the pre- dominant age is 45 to 54 years (37.5%), and the predominant educational level is secondary (vocational) education (43.1%). When compared with general population data (A+O fonds Gemeenten, 2005), the sample’s deviation from the general popula- tion is small (2%-6%). Despite the response rate of 26.7%, the respondents are gener- ally representative of the population with respect to gender, age, and educational level. The respondents also worked in different municipalities spread across the Netherlands and in organizations of various sizes.
HRM. HRM and performance research exhibits little consistency in the selection of HR practices by which to measure HRM. Boselie et al. (2005) analyzed 104 important HRM and performance studies and identified as many as 26 different HR practices that are used in different studies. No single agreed, or fixed, list of HR practices or systems of practices exists by which to measure HRM (Guest, 2011; Paauwe, 2009). Nevertheless, a certain consensus regarding the measurement of HRM has emerged in the scientific literature on HRM and performance during the past decade. More than half of the articles published after 2000 made use of Ability, Motivation, and Oppor- tunity (AMO) theory (Paauwe, 2009). AMO theory proposes that an HRM system should be designed to meet employees’ needs for skills and motivation and, after meeting those needs, provide them with opportunities to use their abilities in various roles (Appelbaum et al., 2000). The underlying idea is that employees will perform well if they have the requisite abilities, when they are motivated and when they obtain the opportunity to profile themselves (Appelbaum et al., 2000).
In our study, an existing data set is used for secondary data analysis. Although this data set can be employed to search for the presence of HR practices within organiza- tions, it was not developed for this specific purpose. The survey only measures 10 different HR practices used to a limited extent, and it is not able to measure all the aspects of HRM proposed by AMO theory. In particular, the survey does not allow us to determine whether an HR system provides employees with opportunities to use their abilities in various job roles. Despite this limitation, we use this list of practices as an indicator of the extent to which HR practices were used in public organizations.
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Researchers often advocate the study of an HRM system instead of individual HR practices (Wright & Boswell, 2002). Organizations rarely use HR practices in isolation; they more typically use them in combination. This system approach adheres to the prin- ciple “the whole is more than the sum of its parts” and examines a bundle of HR prac- tices. In this study, we have followed the system approach. In the survey, employees were asked about the use of 10 different HR practices within their organization (job evaluation conversations, assessment interviews, personal development plans, training plans, career plans, competency management, population aging HRM policy, mobility management, job rotation, and individual coaching). This particular list has been used in previous research (Steijn, 2004). In accordance with Guest’s suggestion, we counted how many of these practices were present in the organization according to its employ- ees. Cronbach’s alpha is widely used to demonstrate consistency among a set of items and, based on the score, it might be argued that a bundle of HR practices can be observed (Guest, Conway, & Dewe, 2004). The Cronbach’s alpha of the HR bundle is .70. This is within the range for acceptable internal consistency. The assumption is that the use of more HR practices suggests the existence of a better developed HRM policy within an organization. In making this assumption, we can only say something about the surplus value of HRM in general terms. However, we do not know whether some individual practices have stronger effects than others, how each of the individual practices affects performance and whether complementarities or synergistic interdependent relation- ships among such practices can further enhance organizational performance (Delaney & Huselid, 1996; Guest et al., 2004; Sels et al., 2006).
Job satisfaction. Job satisfaction is measured using one item: “All things considered, how satisfied are you with your job?” The answers were given using a 5-point Likert- type scale ranging from very dissatisfied (1) to very satisfied (5). Although there is some disagreement regarding how to measure job satisfaction, previous research shows that job satisfaction can reliably be measured using only one item (Nagy, 2002; Wanous, Reichers, & Hudy, 1997).
Organizational performance. To measure organizational performance, perceptions of performance and objective performance indicators can be studied (Delaney & Huselid, 1996; Kim, 2005). In this article, the focus is on employee perceptions of organiza- tional performance because objective performance data are not available in the data- base. When objective performance data are not available, subjective (perceptual) performance measures may be a reasonable alternative (Delaney & Huselid, 1996; Kim, 2005). There is evidence of a strong correlation between perceptual and objec- tive measures at the organizational level, although there is always some doubt regard- ing perceptual measures of performance (Kim, 2005). In this study, we used one item to measure performance, “the perception that the organization is doing good work,” utilizing a 5-point Likert-type scale, ranging from totally disagree (1) to totally agree (5). The use of only one indicator is clearly an important limitation, but at least we are able to characterize how employees assess their organization’s performance.
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Leadership style. To measure the influence of leadership style, we used two latent vari- ables that correspond to the distinction between stimulating and correcting leadership (cf. Bass & Avolio, 1994; Likert, 1961; McGregor, 1960). The specific items can be found in the appendix. All answers were given on a 5-point Likert-type scale ranging from totally disagree (1) to totally agree (5).
Descriptive and reliability statistics were computed for the individual items and the two scales (see Table 1). To show the strength of the associations between the items, Table 1 displays the correlations matrix. The correlations are all significant at the 1% level.
To test whether the distinction between the two leadership styles is supported by the data, we performed confirmatory factor analysis using AMOS version 16. Unlike exploratory factor analysis, in which only the number of factors and observed vari- ables are specified, confirmatory factor analysis permits specification and testing of a more complete measurement model (Byrne, 2001). The simultaneous estimation of the measurement models allows us to examine the relationships between the items and their latent constructs as well as the relationships among the constructs themselves. Furthermore, one also receives information on whether the items load only on their target variable, or whether they load on the other dimension as well (unidimensionality of factors). Based on the results of the confirmatory factor analysis, the measurement model was modified where necessary. The modifications made to enhance the model included the introduction of error correlations.2 Reasons for error correlation include respondents’ inability to answer questions, a lack of effort on the part of the respon- dents to provide the correct answers or other psychological factors, or inadequately worded questions on the survey questionnaire (Byrne, 2001).
For evaluating the convergent validity of the measurement model, Anderson and Gerbing (1988) suggested examining the construct loading and determining whether each estimator’s coefficient is significant. For this model, the regression weights range from .69 to .89 and all are significant (see Table 1). These coefficients may be inter- preted as indicators of the validity of the observed variables, that is, how well they measure the latent dimension or factor. For this model, convergent validity has been achieved. With regard to discriminant validity, we note that the items related to the same construct are always more closely correlated with one another than with the items for the other construct. In addition, Bagozzi and Philips (1982) suggested that discriminant validity in SEM is achieved if the unconstrained model has a signifi- cantly lower chi-square value than the constrained model. In this study, the chi-square value for the unconstrained model (CMIN 1711.061/df 62) appears to be significantly lower than that for the constrained model (CMIN 2722.621/df 63). Thus, for this model, discriminant validity has been achieved. Finally, the R2 in Table 1 is a measure of reliability, which indicates how consistently the observed variable measures the latent dimension. The explained variance corresponding to the observed variables indicates that the respective factor explains an adequate portion of the variance (between 47% and 78%; Perry, 1996).
The overall fit of the measurement model was tested using absolute and relative fit indices, which indicated a good fit. In general, a chi-square test is used to assess the
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sample data in relation to the implied population data. However, there are concerns about using the chi-square test because its probability is sensitive to sample size (Jöreskog, 1993). In larger samples (as in this research), the chi-square test almost always leads to the rejection of the model because the difference between the sample covariances and implied population covariances will lead to a higher chi-square value if the sample size increases.3 As a result, a number of alternative fit measures have been developed (Hu & Bentler, 1999), including the goodness-of-fit index (GFI), the adjusted goodness-of-fit index (AGFI), the normed fit index (NFI), and the compara- tive fit index (CFI). The values for this model were .959 (GFI), .940 (AGFI), .972 (NFI), and .973 (CFI). In the social sciences, a cutoff value of .95 is the prescribed norm (Hu & Bentler, 1999). Based on these fit indices, one can conclude that the model is a good fit. In addition, the root mean square error of approximation (RMSEA) value of .065 indicates that the model is a reasonable fit (Byrne, 2001).
Finally, a traditional measure of scale reliability is Cronbach’s alpha, which mea- sures internal consistency among items on a scale. The Cronbach’s alpha for the stimu- lating leadership scale is .95 and for the correcting leadership scale is .78. Based on these results, one may conclude that the reliability coefficients provide independent corroboration for the results obtained from the use of confirmatory factor analysis. The results show that the distinction between the two leadership styles is supported by the data.
Control variables. Of course, several other variables can affect HRM, job satisfaction, and organizational performance. Therefore, Guest (1999) emphasized that several controls must be in place to take account of individual and organizational factors. Fol- lowing Guest, our control variables are divided into two groups. In the first group, we controlled for individual characteristics (gender, age, and educational level). These controls are based on the assumption that different groups within organizations may be managed differently with the result that their perceptions will be different. Then, we controlled for one important organizational characteristic: organizational size. This control is based on the assumption that large organizations pursuing improved perfor- mance have more resources with which to provide their employees a large HRM policy.
We coded gender as a dummy variable (1 = female). The category of age was sub- divided into five categories (1 = 15-24 years; 2 = 25-34 years; 3 = 35-44 years; 4 = 45-54 years; and 5 = 55 years and older). Educational level was also subdivided into five categories (1 = primary education; 2 = lower vocational education; 3 = higher general secondary education, preparatory academic education; 4 = higher vocational education, candidate exam; and 5 = scientific education). Finally, the category of orga- nizational size was subdivided into seven categories (1 = fewer than 100 employees; 2 = 101-500 employees; 3 = 501-1,000 employees; 4 = 1,001-5,000 employees; 5 = 5,001-10,000 employees; 6 = 10,001-20,000 employees; 7 = more than 20,000 employees). Because we used secondary data analysis, we were restricted to these categories in measuring the control variables.
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The hypothesized relationships among the variables were analyzed using SEM. This statistical methodology allows us to test the full conceptual model in a simultaneous analysis. In addition, SEM enables us to analyze simultaneously the direct and indirect relationships among the dependent and independent variables. Finally, SEM also enables us to compare different models (Byrne, 2001). We built our SEM model using AMOS version 16. To examine whether the data were normally distributed, the index of multivariate kurtosis was considered. Bentler (2005) has suggested that, in practice, values above 5.00 are indicative of nonnormality. Our data have a score of 4.94, which indicates that it is normally distributed.
In Table 2, the means, standard deviations, and correlations of the study variables are presented.The results show that, of the 10 HR practices, employees observed, on average, the use of 4 HR practices within their organizations. The most frequently observed HR practice was job evaluation conversations, and the least frequently observed practice was job rotation. Employees were generally satisfied with their jobs. The average score for this variable on a 5-point scale was 3.78. Moreover, employees perceive the organization to be doing good work, with the average score on a 5-point scale being 3.48. Finally, the average score for the stimulating leadership style was 3.46 on a 5-point scale; the average score for the correcting leadership style was 3.47.
To test the proposed relationships, a causal structure was posited that resulted in a structural equation model. First, we tested the hypothesis that job satisfaction acts as a mediating variable in the relationship between HRM and organizational performance. A distinction can be made between fully mediated and partially mediated models (Wood, Goodman, Beckman, & Cook, 2008). Therefore, in SEM, two different mod- els must be created. In the first model, the direct relationship between HRM and orga- nizational performance was fixed at zero. In the second model, the direct relationship and indirect relationship between HRM and organizational performance were esti- mated. By using the chi-square difference test and other global-fit measures, one can test the models against each other. In Table 3, the fit indices are presented. The chi- square difference test implies that the relationship between HRM and organizational
Table 2. Means, Standard Deviations, and Correlations (N = 6,253).
M SD 1 2 3 4 5 6 7 8 9
(1) Gender .42 .493 — (2) Age 3.57 .958 −.223** — (3) Educational level 3.18 1.169 .071** −.116** — (4) Organizational size 2.76 1.269 −.009 .007 .159** — (5) HRM 3.73 2.04 .004 .045** .093** ,175** — (6) Job satisfaction 3.78 .933 .037** −.014 .008 −.016 .150** — (7) Organizational performance 3.48 .956 −.011 .005 .040** .043** .206** .319** — (8) Stimulating leadership 3.46 .914 .008 −.002 −.008 .000 .251** .416** .443** — (9) Correcting leadership 3.47 .854 −.007 .014 −.045** .016 .188** .240** .325** .649** —
Note. HRM = human resource management. **p < .01.
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performance is partially mediated by job satisfaction. Furthermore, the partially medi- ated model shows a better model fit than the fully mediated model.In Figure 2, the partially mediated model is shown. Only the statistically significant relationships are described (with a significance level of .01). The numerical scores on all lines indicate standardized regression coefficients (β), and the scores in brackets are the explained variances.
Second, we analyzed the effect of leadership style on HRM. We assumed that the amount of HR practices perceived by employees would be influenced by their supervi- sors’ leadership styles. We distinguished between stimulating and correcting leader- ship to test our hypotheses that (a) a stimulating leadership style has a positive effect on the amount of HR practices used within an organization and (b) a correcting leader- ship style has a negative effect on the amount of HR practices used within an organiza- tion. The overall model fit was tested using several fit indices. The model fit values were .999 (GFI), .997 (AGFI), .996 (NFI), and .998 (CFI), implying that the model was a very good fit. In addition, the RMSEA, with a value of .015, also indicated that the model is a good fit.The model in Figure 3 is the result. Only the statistically signifi- cant relationships are shown (with a significance level of .01). The numerical scores on all lines indicate standardized regression coefficients (β), and the scores in brackets are the explained variances. The results show that a stimulating leadership style has a significantly positive effect on the implementation of HR practices, supporting Hypothesis 2a, whereas a correcting leadership style appears to have no effect on the amount of HR practices used, rejecting Hypothesis 2b.
Table 3. Fit Indices for the Fully and Partially Mediated Models.
Model χ2 df GFI AGFI NFI CFI RMSEA
Fully mediated model 189.389 7 .990 .970 .874 .877 .065 Partially mediated model 8.670 6 .999 .998 .994 .998 .008
Note. GFI = goodness-of-fit index; AGFI = adjusted goodness-of-fit index; NFI = normed fit index; CFI = comparative fit index; RMSEA = root mean square error of approximation.
Job Satisfaction (.024)
Figure 2. Result of structural equation modeling.
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When we compare the model in Figure 2 with the model in Figure 3, we see that the first model shows a statistically significant and positive relation between HRM and organizational performance. However, the model in Figure 3 shows that this relation becomes weaker when the variables related to leadership style are included. Therefore, we also examined whether supervisors’ leadership style influences the relationship between HRM and performance (moderating effect). However, these effects do not appear to be significant. These results imply that leadership style has its own, indepen- dent, effect.
Finally, model validity was achieved through cross-model validation. Camilleri (2006) suggested attaining cross-validation in three phases. In the first phase, data are divided into two data sets. One data set consists of a random selection of 20% of the data collected from respondents; the second data set consists of a random selection of 80% of the data collected. In the second phase, SEM by means of a path analysis that calculates the structural fit index (measured by R2) is conducted for both the data sets. The third phase consists of examining the differences between the calculated structural fit indices obtained for each data set. The extent of model validity is determined by the similarity in the variance accounted for by each data set. The results of the cross-model validation are presented in Table 4. Given the fact that the differences in the explained variances are small, the cross-model validation provided satisfactory results.
Job Satisfaction (.177)
Figure 3. Result of structural equation modeling.
Table 4. Results of Cross-Model Validation Showing R2 for the Three Samples.
Predicted variable Full sample 20% sample 80% sample Difference in R2 for 20%-80% sample
HRM .102 .109 .100 .009 Job satisfaction .177 .197 .173 .024 Organizational performance .229 .240 .231 .009
Note. HRM = human resource management.
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Looking at the main independent and dependent variables, we expected that a supervi- sors’ leadership style has an influence on the implementation of HR practices. Our research provides empirical evidence that a supervisor’s leadership style, and specifi- cally a stimulating leadership style, is important to the HRM–performance relation- ship within an organization. When we compare Figure 2 with Figure 3, we see that adding “leadership” importantly increases explained variance. As such, the results of this study emphasize the important role of supervisors in the HRM and performance model, as was previously suggested by Wright et al. (2005) and Paauwe (2009), among others. When we look at the results in greater detail, we find evidence of the positive relationship between a supervisor’s leadership style and the HR practices conducted within the organization, as previously shown by Purcell and Hutchinson (2007) and Zhu et al. (2005). More specifically, a stimulating leadership style is demonstrated to have an important effect on the implementation of HR practices. In contrast, a correct- ing leadership style appears to have no effect on the amount of HR practices used. Thus, our hypothesis that a stimulating leadership style has a positive effect on the amount of HR practices used within an organization is confirmed, whereas our hypoth- esis that a correcting leadership style has a negative effect on the amount of HR prac- tices used within an organization must be rejected. Nevertheless, the results are in line with the research discussed by Guest (1987), which argued that a stimulating leader- ship style (theory Y) could be linked to soft HRM (HRM focusing on the development, motivation, and commitment of employees). Furthermore, it would be interesting in future research to test Guest’s (1987) idea that theory X (with a correcting role for the supervisor) is linked to hard HRM (a focus on rewards and determinations of whether employees do what the organization requires). To study this relationship, data must include such elements of HRM as performance-related pay. An additional interesting result is that a stimulating leadership style appears to be very important to employees’ degree of satisfaction, while the correcting leadership style has a negative influence on job satisfaction. Finally, a stimulating leadership style and a correcting leadership style have a positive effect on organizational performance, although the effect of the stimu- lating leadership style is much larger.
Our research also provides empirical evidence for the mediating relationship between HRM and organizational performance. The results indicate a direct effect and an indirect effect of HR practices on organizational performance, as is already assumed in the Paauwe and Richardson (1997) model. Our analysis shows that when employees perceive a more elaborate use of HR practices, organizations do achieve a better score for their performance. Moreover, when more HR practices are used, employees expe- rience greater satisfaction, which positively influences organizational performance. This study adds to previous research by confirming the hypothesis that job satisfaction acts as a mediating variable in the relationship between HRM and organizational per- formance. This important finding provides more insight into employees’ reactions to HRM and its effect on organization performance. These reactions have been largely disregarded in previous research (Boselie et al., 2005).
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Looking at the results in greater detail, we see that older employees and employees with higher education levels perceive a greater use of HR practices. This suggests that different groups within organizations (e.g., younger and older employees) are man- aged differently. In addition, organizational size has a relatively large effect on HRM, as can be concluded from its high beta weight. In line with Guest’s (1999) assumption, this finding indicates that the HRM policy of organizations is influenced by such con- textual variables as the size of the organization.
Finally, our study supports the idea that a focus on HRM as a method of increasing organizational performance is also relevant in the public sector. Based on this study, conclusions regarding the relationship between HR practices and organizational per- formance in private organizations (cf. Paauwe, 2009) also appear applicable to public sector organizations. In line with the results of previous research (e.g., Gould-Williams, 2003; Kim, 2005; O’Toole & Meier, 2008), public organizations appear to be more successful if they value their employees and if they utilize a more extended set of HR practices. In addition, this study illustrates the important role supervisors play in this relationship in the public sector.
In the introduction, we stated that public sector performance has become an increas- ingly important issue over the past three decades. Several innovations in the field have promised to increase the quality of public service while reducing its costs. However, research into the contributions of HRM to these developments has been scarce. Our main research question, therefore, was “To what extent is the relationship between HRM and the performance of public organizations mediated by job satisfaction, and what is the influence of a supervisor’s leadership style on the implementation of HR practices?” Based on the data and arguments presented in this study, one can conclude that a positive relationship exists between HRM and organizational performance in the public sector. Specifically, by studying the relationships among HRM, job satisfaction, and organizational performance in a single model, this research showed that job satis- faction partly mediates the relationship between HRM and organizational perfor- mance. Moreover, this study showed that the choice to use HR practices is influenced by a supervisor’s leadership style.
Despite these findings, the limits of this article suggest lines of further research. This study used a cross-sectional data set restricted to Dutch municipalities. Its find- ings, therefore, have limitations with respect to internal and external validity. A longi- tudinal data set would increase internal validity, as such data enable researchers to make stronger causal claims. HRM–performance research is dominated by cross- sectional research, which generates considerable discussion of questions regarding “what came first?” (Guest, 2011). Are public organizations more successful if they value their employees, or do public organizations value their employees if they are more successful? Or are both propositions true? A similar problem can be observed with respect to the relationship between job satisfaction and performance (Judge et al., 2001; Taris & Schreurs, 2009). For this reason, a longitudinal research design would
Vermeeren et al. 191
be preferable in further research. With respect to external validity, we have examined the HRM and performance relationship in the public sector by focusing on Dutch municipalities. More research is needed to determine whether the HRM–performance relationship holds for different kinds of public sector organizations and different coun- tries. Finally, the selection of the data source (survey) may have influenced some of the results. The use of only one survey instrument may create distortions in the data, in particular regarding common method bias (Podsakoff & Organ, 1986). This is spe- cifically a question with respect to the connection between job satisfaction and organi- zational performance. The strong relationship between these two variables may be attributable to the fact that employees were asked to rate their job satisfaction and their perceptions of organizational performance. This potential problem highlights the importance of replicating our research, ideally by using objective performance indicators.
This study not only generates recommendations to further enhance HRM and per- formance research in the public sector. Based on its observations, this study also pro- vides possible starting points for improving the performance of public organizations through their employees. To increase organizational performance, it appears important that organizations invest in employees’ needs by implementing HR practices. Moreover, this study suggests that the stimulating leadership style is very important to employee satisfaction, while the correcting leadership style negatively influences job satisfaction. This suggestion further implies that when a public sector organization wishes to acquire an involved and motivated staff, its supervisors must assume a stim- ulating role. Based on our findings, attention to a supervisor’s leadership style appears to be a prerequisite for successfully implementing HRM within an organization. More specifically, this study indicates that there is an important role for supervisors to play in implementing HRM, developing a satisfied workforce, and enhancing organiza- tional performance.
•• X1: My supervisor keeps an eye on my work to check if I do my work well. •• X2: My supervisor tells me when I do not do my work well. •• X3: My supervisor controls whether work is finished on time.
•• Y1: My supervisor is aware of employees’ welfare. •• Y2: I get enough support from my supervisor. •• Y3: My supervisor allows people to cooperate well. •• Y4: My supervisor lets me know if she or he is satisfied with my work. •• Y5: My supervisor consults his staff about issues that are important to them. •• Y6: My supervisor provides support as needed. •• Y7: My supervisor creates a work climate in which I can develop new ideas
about my work.
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•• Y8: My supervisor is accessible. •• Y9: My supervisor lets us participate in conversations that are relevant to me
and my colleagues. •• Y10: My supervisor protects me from high work pressure.
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
The author(s) received no financial support for the research, authorship, and/or publication of this article.
1. Although there is some disagreement about the precise relationship between job satisfac- tion and performance, the literature generally assumes that greater job satisfaction is asso- ciated with better individual and organizational performance (Judge, Thoresen, Bono, & Patton, 2001; Taris & Schreurs, 2009).
2. Error correlation between X1 and X2 is .137 and between Y10 and Y11 is .326. 3. Chi-square value = N × difference between sample covariances and implied population
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Brenda Vermeeren is a PhD student at the Department of Public Administration at Erasmus University Rotterdam. Her research is focused on the relationship between human resource management (HRM) and Performance of Public Organizations.
Ben Kuipers is an assistant professor at the Department of Public Administration at Erasmus University Rotterdam and director and consultant at Performability. His research and consulting work focus on strategic human resource management, change management, and team perfor- mance in private and public organizations.
Bram Steijn is a full professor of HRM in the public sector at the Department of Public Administration at Erasmus University Rotterdam. His current research is focused on public service motivation, job satisfaction, and HRM and performance in the public sector.
Journal ofGeneral Management Vol. 26 No.2 Winter 2000
A Reappraisal ofHRM Models in Britain by Pawan s. Budhwar
Human Resource Management is still struggling to find a strategic role.
For a better understanding ofthe subject, both management practitioners and scholars need to study human resource management (HRM) in context . The dynamics of both the local/regional and international/ global business context in which the firm operates should be given a serious consideration. Similarly, there is a need to use multiple levels of analysis when studying HRM: the external social, political, cultural, and economic environment; and the industry. Examining HRM out-of-context could be misleading and fail to advance understanding. A key question is how to examine HRM in context? One way is by examining the main models of HRM in different settings. However, there is no existing framework that can enable such an evaluation to take place. An attempt has been made in this paper to provide such a framework and empirically examine it in the British context.
This paper is divided into three parts. Initially, it summarises the main developments in the field of HRM. Then, it highlights the key emphasis of five models of HRM (namely, the 'Matching model'; the 'Harvard model'; the 'Contextual model'; the '5-P model'; and the 'European model' ofHRM). Lastly, we will address the operationalisation of the key issues and emphases of the aforementioned models by examining their applicability in six industries ofthe British manufacturing sector. The evaluation highlights the context specific nature of British HRM.
This introduction looks at the need to identify the core emphasis of the main HRM models that could be used to examine their applicability in different national contexts. Developments in the field of HRM are now well documented in the literature [2, 3]. The debate relating to the nature ofHRM continues today, although the focus of the debate has changed over a period of time. At present, the contribution ofHRM in improving
Pawan S. Budhwar is Lecturer in Organizational Behaviour and HRM at CardiffBusiness School, UK.
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the firm's performance and the overall success of any organization (alongside other factors) is being highlighted in the literature [4, 5].
Alongside these debates, a number of important theoretical developments have taken place in the field of HRM. For example, a number ofmodels ofHRM have been developed over the last 15 years or so. Some of the main models are: the 'Matching model'; the 'Harvard model'; the 'Contextual model'; the '5-P model'; and the 'European model' ofHRM [6, 7]. All these models have been developed in the US and the UK. These models ofHRM are proj ected to be useful for analysis both between and within nations. However, the developers of these models do not provide clear guidelines regarding their operationalisation in different contexts. Moreover, it is interesting to note that, although a large number ofscholars refer to these models, very few have tested their practical applicability (exceptions being Benkhoff ; Monks ; Truss et al. ). For the development ofrelevant management practices there is then a clear need not only to highlight the main emphasis of the HRM models but also to show their operationalisation. Such an analysis will help to examine the applicability of these models in other parts of the world. With the increasing levels ofglobalisation ofbusiness such investigations have become an imperative.
Moreover, although the present literature shows an emphasis on themes such as 'strategic HRM' (SHRM), the majority of researchers persist in examining only the traditional 'hard' and' soft' models ofHRM . For the growth and development of SHRM, there is a strong need to examine the applicability of those models ofHRM which can help to assess the extent to which it has really become strategic in different parts of the world, and the main factors and variables which determine HRM in different settings. This will not only test the applicability of HRM approaches in different regions, but will also help to highlight the context specific nature of HRM practices.
The aims of this paper are twofold. First, to identify the core emphasis offive main models ofHRM which can be used to examine their applicability in different national contexts. Second, to test empirically the applicability of these models of HRM in the British context. Before answering why this investigation is being conducted in the UK, the main models of HRM are briefly analysed.
Models of HRM
Five models ofHRM, which are widely documented in the literature are chosen for analysis. They are: the 'Matching model'; the 'Harvard model'; the 'Contextual model'; the '5-P model'; and the 'European model' ofHRM [12,13, 14]. The reason for the selection and analysis of thesemodelsis two-fold.First, itwillhelptohighlighttheirmaincontribution
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to the development ofSHRM as a distinct discipline. Second, it will help to identify the main research questions suitable for examining these models in different national settings. The analysis begins with one ofthe traditional models ofHRM.
The strategic fit of HRM
The main contributors to the 'Matching model' ofHRM come from the Michigan and New York schools. Fombrun et al. 's  model highlights the 'resource' aspect ofHRM and emphasises the efficient utilisation of human resources (like otherresources) to meet organizational objectives. The matching model is mainly based on Chandler's  argument that an organization's structure is an outcome of its strategy. Fombrun et al. expanded this premise and developed the matching model of strategic RRM, which emphasises a 'tight fit' between organizational strategy, organizational structure and HRM system, where both structure and HRM are dependent on the organization strategy. The main aim of the matching model is therefore to develop an appropriate 'Human Resource System' that will characterise those HRM strategies that contribute to the most efficient implementation ofbusiness strategies. The Schuler group made further developments to the matching model and its core theme of 'strategic fit' in the late 19?Os. The core issues emerging from the matching models are:
1. Do organizations show a 'tight fit' between their HRM and organization strategy where the former is dependent on the latter? Do personnellHR managers believe they should develop HRM systems only for the effective implementation of their organization strategies?
.2. Do organizations consider their HRs as a cost and use them sparingly? Or, do they devote resources to the training of their HRs to make the best use of them?
3. Do HRM strategies vary across different levels of employees?
The soft variant of HRM
Beer et al.  articulated the 'Harvard Model' of HRM. It is also denoted as the 'Soft' variant ofHRM , mainly because it stresses the 'human' aspect of HRM and is more concerned with the employer- employee relationship. The model highlights the interests of different stakeholders in the organization (such as shareholders, management, employee groups, government, community and unions) and how their interests are related to the objectives of management. It also recognises the influence ofsituational factors (such as the market situation) on HRM policy choices. According to this model, the actual content of HRM is described in relation to four policy areas i.e. human resource flows,
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reward systems, employees' influence and work systems. Each of the four policy areas is characterised by a series of tasks to which managers must attend. The outcomes that these four HR policies need to achieve are commitment, competence, congruence, and cost effectiveness. The model allows for analysis of these outcomes at both organizational and societal levels. As this model acknowledges the role ofsocietal outcomes, it can provide a useful basis for comparative analysis of HRM . The key issues emerging from this model which can be used for examining its applicability in different contexts are:
1. What is the influence ofdifferent stakeholders and situational and contingent variables on HRM policies?
2. To what extent is communication with employees used as a means to maximise commitment?
3. What level of emphasis is given to employee development through involvement, empowerment and devolution?
The contextual model of HRM
Researchers at the Centre for Corporate Strategy and Change at the Warwick Business School developed this model. They examined strategy making in complex organizations and related this to the ability to transform HRM practices [21,22]. Hendry and associates argue that HRM should not be labelled as a single form of activity. Organizations may follow a number of different pathways in order to achieve the same results. This is mainly due to the existence ofa number of linkages between the outer environmental context (socio-economic, technological, political-legal and competitive)and inner organizationalcontext (culture, structure, leadership, task-technology and business output). These linkages directly contribute to forming the content of an organization's HRM. The core issues emerging from this model are:
1. What is the influence ofeconomic (competitive conditions, ownership and control, organization size and structure, organizational growth path or stage in the life cycle and the structure of the industry), technological (type ofproduction systems) and socio-political (national education and training set-up) factors on HRM strategies?
2. What are the linkages between organizational contingencies (such as size, nature, positioning ofHR, and HR strategies) and HRM strategies?
Strategic integration of HRM
The existing literature reveals a trend in which HRM is becoming an integral part of business strategy - hence, the emergence of the term SHRM. It is largely concerned with 'integration' and 'adaptation'. The purpose of SHRM is to ensure that :
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1. HRM is fully integrated with the strategy and strategic needs of the firm;
2. HR policies are coherent both across policy areas and across hierarchies; and
3. HR practices are adjusted, accepted, and used by line managers and employees as part of their every day work.
Based on such premises, Schuler  developed a 5-P model of SHRM that melds five HR activities (philosophies, policies, programs, practices and processes) with strategic needs. This model, to a great extent, explains the significance ofthese five SHRM activities in achieving the organization's strategic needs, and shows the inter-relatedness of activities that are often treated separately in the literature. This is helpful in understanding the complex interaction between organizational strategy and SHRM activities.
The model raises two important issues (also suggested by many other authors in the field) for SHRM comparisons. These are:
1. What is the level of integration of HRM into the business strategy?
2. What is the level ofresponsibility for HRM devolved to line managers?
European model of HRM
Based on the growing importance of HRM and its contribution towards economic success and the drive towards Europeanisation, Brewster  proposes a 'European model ofHRM'. His model is based on the premise that European organizations operate with restricted autonomy. They are constrained at both the international (European Union) and national levels by national culture and legislation, at the organization level by patterns of ownership, and at the HRM level by trade union involvement and consultative arrangements [26, p. 3]. Brewster suggests the need to accommodate such constraints when forming a model ofHRM. He also talks about 'outer' (legalistic framework, vocational training programs, social security provisions and the ownership patterns) and 'internal' (such as union influence and employee involvement in decisionmaking) constraints on HRM. Based on such constraints, Brewster's model highlights the influence of factors such as national culture, ownership structures, the role ofthe state and trade unions on HRM, in different national settings.
The European model shows an interaction between HR strategies, business strategy and HR practice and their interaction with an external environment constituting national culture, power systems, legislation, education, employee representation and the constraints previously mentioned. It places HR strategies in close interaction with the relevant
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organizational strategy and external environment. One important aim of this model is to show factors external to the organization as a part of the HRM model, rather than as a set of external influences upon it.
From the above analyses, it can be seen that there is an element of both the contextual and 5-P models of HRM present in Brewster's European model. Apart from the emphasis on 'strategic HRM', one main issue important for cross-national HRM comparisons emerges from Brewster's model. This is:
• What is the influence of international institutions, national factors (such as culture, legal set up, economic environment and ownership patterns), and national institutions (such as the educational and vocational set-up, labour markets and trade unions) on HRM strategies and HRM practices?
Recently, Budhwar and associates [27, 28,29,30] have proposed a framework for examining cross-national HRM. They have identified three levels of factors and variables that are known to influence HRM policies and practices and which are worth considering for cross-national HRM examinations. These are national factors (such as national culture, national institutions, business sectors and dynamic of the business environment), contingentvariables (such as the age, size,nature, ownership, and life cycle stage of the organization, the presence of trade unions and HR strategies, and the interests of different stakeholders) and organizational strategies and policies (related to primary HR functions, internal labourmarkets, levels ofintegration and devolvement, and nature ofwork). This framework is used to examine the applicability ofthe issues arising from the five HRM models in British organizations. But why conduct this form of investigation, and in the British context?
As mentioned already, there is a scarcity of this type of research. So far, only Truss et al.  have examined the applicability of some of the models of HRM in a few UK case companies. Apart from their research, there is scarcely any study that conducts the type ofinvestigation described here. There are, then, two main reasons for conducting this investigation in British companies. First, a UK sample possesses the characteristics suitable to test the operationalisation ofthe main emphases and critical issues ofthe five models ofHRM. Second, the HRM function in the UK is under intense pressure due to competitive conditions, and the restructuring and rightsizing programmes going on in Britishorganizations, as well as the pressure on British firms from EU and other international players to stay competitive and meet the EU regulation regarding the management ofhuman resources. In such dynamic business conditions it is worth examining the HRM function in context. Moreover, since the five models have been developed among Anglo-Saxon nations, it is sensible to test them initially in these countries before recommending their testing in others parts of the world.
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The Research Methodology
Sample and data collection
Amixed methodology, using a questionnaire survey and in-depth interviews, was adopted. During the first phase of the research, a questionnaire survey was conducted between August 1994 and December 1994 in British firms having 200 or more employees in six industries in the manufacturing sector (food processing, plastics, steel, textiles, pharmaceuticals and footwear). The respondents were the top personnel specialist (one each) from each firm. The response rate ofthe questionnaire survey was approximately 19per cent (93 out of500 questionnaires). The items for the questionnaire were constructed from existing sources, such as those developed by Cranfield researchers in their study ofcomparative European HRM  and other studies (see for example [33, 34]). The questionnaire consisted of 13 sections. These were: HR department structure, role of the HR function in corporate strategy, recruitment and selection, pay and benefits, training and development, performance appraisal, employee relations, HRM strategy, influence ofnational culture, national institutions, competitive pressures and business sector on HRM, organizational details. Public limited companies represented approximately one-third of the sample, with the remainder from the private sector. The industry-wide distribution of respondents is shown in Table 1.
Table 1: Sample Industry Distribution
Indtitry Percentage . Food Processing 17.2 Plastics 17.2 Steel 16.1 Textiles 17.2 Pharmaceuticals 21.5 Footwear 10.8
Analysis of the demographic features of the sample suggests that the sample was representative ofthe total population. Sixty-two per cent of sample organizations were medium-sized and employed 200-499 employees, 14 per cent employed 500-999 employees, 15 per cent 1000- 4999 employees, and 8 per cent employed 5000 or more employees.
In the second phase of the research, 24 in-depth interviews were conducted with personnel specialists representative of those firms which participated in the first phase of the research. The interviews examined six themes, viz. the nature ofthe personnel function, integration ofHRM into the corporate strategy, devolvement ofHRM to line managers, and the influences of national culture, national institutions and business environment dynamic on HRM.
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Multiple regression analysis and descriptive statistics are used to analyse questionnaire data. Table 1 in the Appendix shows the main dependent and independent variables used for multiple regression analysis. Table 2 in the Appendix presents the mean scores of respondents regarding the influence of different aspects of national factors (culture, institutions, business environment dynamic and business sector) and HR strategies on HRM policies and practices. The qualitative data is content analysed. In the discussion, survey results are complemented by key messages coming from the qualitative interviews.
Findings of the Study
The matching models suggest a strong dependence ofHRM on organization strategy, i.e, HRM is mainly developed for the effective implementation of organization strategies. The results show that in 34.6 per cent of the organizations under study personnel is involved from the outset in the formation ofcorporate strategy, and 42 per cent oforganizations actively involve HRM during the implementation stage of their organizational strategies. Such a trend of 'active' personnel management is further evident from 55 per cent of sample organizations having personnel representation at board level. Moreover, 81.1 per cent ofthe respondents believe that their HRM has become proactive over the last five years (i.e. more involved in decision making).
Such results reflect the growing strategic and proactive nature of the British personnel function. There is support for such findings in the existing literature [35, 36].
The second reason to examine the matching models in a cross- national context is to assess whether human resources are considered as a cost ('use them sparingly') or as an asset (spend on training to 'make their best use '). The results suggest that British organizations claim to be spending variable though reasonable proportions oftheir annual salaries on human resource development (HRD) related activities (see Table 2).
Table 2: Proportion of Annual Salaries and Wages Currently Spent on Training and Development
Value(%) Percentage of Sample Nil -
0.1- 2.00 41.3 2.01-4.00 7.6 4.01- 6.00 3.3
6.01 or more 1.1 Don't know 46.7
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A similarpattern characterizes the number ofdays training provided to different levels ofemployees (see Table 3). The substantial majority of British firms have increased (rather than maintained or reduced) their training spend across all categories of staff over the last five years (see Table 4). There is evidence that this investment has been directed particularly in the areas of performance appraisal, communication, delegation, motivation and team building.
Table 3: Average Number of Days Training and Development Given to Staff Categories Per Year
Different Cat~ories of Staff Number ofDays Mana}!erial(%) Prof,/Technical(%) Clerical(%) Manual(%)
Nil 1.2 1.1 2.3 1.2 0.1-3.00 24.4 22.8 35.6 24.7 3.01-5.00 20.9 21.7 13.8 11.7
5.01-10.00 7.0 14.7 4.6 11.8 10.1 and above 5.8 4.6 3.5 9.4
Don't know 40.7 40.9 40.2 41.2
These developments in the British HRD scene appear to be consistentwith the increased realisation by both business and government that the development ofhuman resources has been neglected for too long .
Table 4: Nature of Change in Amount of Money Spent on Training Per Employee
Different Categories of Staff Nature ofChange Mana}!erial("/o) Prof,/Technical("/o) Clerical(%) Manual(%) Increased 59.8 63.0 53.3 60.9 Same 21.7 18.5 28.3 20.7 Decreased 7.6 8.7 7.6 7.6 Don't know 10.9 9.8 10.9 10.9
Another key emphasis of the matching model suggests a variation in HRM strategies across different levels of employees. This is clearly evident from the results as the nature and type of approach to the management of different levels of employees vary significantly (see for example, Tables 3 and 4). This aspect is further highlighted later in this paper. Based on the above evidence, it seems that the British personnel function still plays an implementationist role rather than being actively involved in strategy formulation. On the other hand, there is a strong emphasis on training and development.
Important Situational Determinants
One of the basic assumptions of the Harvard model of HRM is the influence of a number of situational factors (such as work force
JournalofGeneralManagement Vol. 26 No.2 Winter 2000
characteristics, unions, labour legislation and business strategy) and different stakeholders (such as unions, government and community) on HRM policies. The impact of a few of the situational factors and stakeholders (proposed by Beer et al. [38D was examined during the multiple regressions, analysis of means scores and the analysis of interview results.
Taking the number of employees as a characteristic of the work force [39, 40], the regression results show that small British organizations (those having less than 499 employees) are likely to recruit their managerial staffby advertising externally. Medium size organizations (those having 500to 999employees) are likely torecruittheirclerical staffas apprentices. Large organizations (those having 1000 to 4999 employees) are more likely to use assessment centres to train their human resources. Lastly, very large firms (having over 5000 employees) are less likely to recruit their managerial staff by advertising internally and their manual staff through the use of word of mouth method. These firms are likely, however, to recruit their professional staff with the help of consultants. Moreover, large UK firms are more likely to adopt formal career plans, succession plans andplanned job rotation to develop their human resources (for details see Table 1 in Appendix).
Support for these findings can be found in the literature (see for example, [41D. The size ofan organization has a positive relation with the formalism of their HRM policies . Therefore, as the size of the firm becomes large, logically, the degree offormalismofits personnel function increases and the organization obtains the help ofrecruitment agencies to recruit its professional employees.
The results show a strong impact of labour laws, educational and vocational training set up (highlighting governmentpolicy) and unions on British HRM policies (see Table 2 in Appendix). Unions in the UK are now playing a more supportive role . The implementation of labour legislation is also having significant influence on UK HRM policies. Various pressures groups also contribute in this regard (for example, against age discrimination). Over the last decade or so, the education and vocational set-up in the UK has initiated a number of programmes and qualifications such as the national vocational qualifications (NVQs), investorsinpeople (IIP)and'opportunity2000' .These are now significantly influencing HRMin British organizations .
The results also show a number ofsignificant regressions regarding the impact of HR strategies on British HRM. Results in Table 1 in the Appendix show that organizations pursuing a cost reduction strategy are more likely to recruit their clerical and manual staffas apprentices. These organizations are likely to adopt an effective resource allocation HR strategy. Organizations pursuing a talent improvement HR strategy are
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less likely to recruit their manual staff by word of mouth method. However, sample firms pursuing a talent acquisition HR strategy are likely to use consultants to recruit their managerial staffand recruitment agencies for manual staff. These organizations are also likely to adopt assessment centres to train their staff.
Most of the above results seem to be logical. For example, by recruiting employees as apprentices organizations not only pay them less but also train and prepare them for working in the long run in their organizations. Hence, it helps to reduce the costs. Similarly, by recruiting employees externally, organizations increase the opportunity to improve their talent base.
The second key emphasis of the Harvard model of HRM suggests extensive use of communication with employees as a mechanism to maximise commitment [45, p. 63]. Ninety-one per cent of British organizations share information related to both strategy and financial performance with their managerial staff. However, this percentage is significantly lower for other categories of employees (see Table 5).
Table 5: Employees Formally Briefed about Strategy or Financial Performance
Different Categmes of Staff Tvoe ofInformation Managerial(%) Prof/Technical(%) Clerical(%) Manual(%) Strategy - 8.0 8.6 6.4 Financial Performance 6.5 14.8 39.5 38.5 Both 91.3 65.7 42.0 23.6 Neither 2.2 11.6 9.9 31.5
There can be a number of explanations for the difference in the sharing of strategic and financial information with different levels of employees in British organizations. Whilst noting that top personnel specialists are now more and more involved in strategy making, it seems that top management continue to be reluctant to devolve responsibility to line managers for the dissemination offinancial and strategic information. These issues are further examined when discussing the 5-P model.
The above discussion suggests applicability of the Harvard model ofHRM in British organizations. The results showed an impact oflabour laws, education vocational set-up, unions, work force characteristics and HR strategies on HRM policy choices. There are encouraging results on the communication of information with different levels of employees regarding sharing strategic and financial performance and on employee development through their involvement and training.
The main issue against which the relevance of the contextual model can be evaluated is the impact on HRM policies and practices of economic
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(characterized by competitive pressures, ownership and life cycle stage), technological (typeofproduction system)and socio-political (characterised by national education and training set-up) factors and organizational contingencies (such as size, age and nature of organization).
The results show a strong influence of competitive pressures on British HRM policies and practices (see Table 2 in Appendix). To achieve a competitive edge in such situations, they are focusing particularly on total customer satisfaction and the restructuring oftheir organizations. As competitive pressures are also forcing British organizations to enter into new business arrangements (such as alliances), so these are having direct influence on HRM policies and practices.
The results also show the impact of increasingly sophisticated informationandcommunicationstechnologyon HRMpolicies andpractices (see Table 2 in the Appendix). Further evidence indicates that the majority of respondents suggest these technologies mainly influence training, appraisal and transfer functions. Why? Because with the change in technology, employees need to be trained to handle it. To see if they have achieved the required competence they are appraised and if required, transferred to suitable positions.
Finally, we summarise the relevance of the contextual model of HRM in terms ofthe impact oforganizational contingencies. Contingent variables such as size of the organization, presence of HR strategy and presence of unions were examined above, as were the impacts of ownership and organizational life cycle stage. These variables do not seem significantly to impact HRM in British organizations.
Nevertheless, there is significant evidence overall regarding the applicability of the contextual model ofHRM in British organizations.
Strategic Integration and Devolvement of HRM in Britain
Our discussion now focuses on the relevance of the '5 P' model ofHRM in British organizations. To achieve this, results regarding the integration of HRM into corporate strategy and the devolution of responsibility for HRM to line managers are examined. The detailed results are presented elsewhere , but are summarized below.
In brief, the level of integration is measured on the basis of the following four scales:
a) representation of Personnel on the board; b) presence of a written Personnel strategy; c) consultation ofPersonnel (from the outset) in the development
of corporate strategy; and d) translation ofPersonnel/HR strategy into a clear set ofwork
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The level ofdevolvement is measured on the basis ofthe following three scales:
a) primary responsibility with line managers for HRM decision making (regarding pay andbenefits, recruitment and selection, training and development, industrial relations, health and safety, and workforce expansion and reduction);
b) change in the responsibility of line managers for HRM (regarding pay andbenefits, recruitment and selection, training and development, industrial relations, health and safety, and workforce expansion and reduction); and
c) percentage ofline managers trained in performance appraisal, communication, delegation, motivation, team building and foreign language.
High integration is the result ofpersonnel representation at board level, the personnel function being consulted about corporate strategy from the outset, the presence of a written personnel strategy, and the translation of such a strategy into a clear set of work programmes. As mentioned earlier, the personnel function is represented at board level in the majority (55 per cent of organizations). For our sample companies, 87.4 per cent have corporate strategies. Of these, 34.6 per cent consult the personnel function at the outset, 42 per cent involve personnel in early consultation, and only 13.6 per cent involve personnel during the implementation stage. Over a quarter (26.4 per cent) of sample organizations did not have a personnel strategy, 29.9 per cent had an unwritten strategy and 43.7 per cent had a written personnel strategy. A clear majority (57.4 per cent) of organizations felt that their personnel strategy was translated into clear work programmes.
High devolvement is the result of: primary responsibility for pay, recruitment, training, industrial relations, health and safety and expansion/ reduction decisions lying with the line (see Table 6); line responsibility for these six areas on an increasing trend (see Table 7); and, evidence of devolved competency with at least 33 per cent of the workforce being trained inappraisals, communications,delegation,motivation,teambuilding and foreign languages.
Budhwar's  analysis shows that when the four measures of integration are summated and divided into a single scale ofhigh and low type, 50.5 per cent of the sample organizations would be categorised as having high integration and 49.5 per cent fall into the low integration category. The average score of the summated integration scale for a1193 organizations is .50. These results show a moderate level of integration being practised in the sample industries. On the other hand, the summated scales demonstrate a low level ofdevolvement. Sixty-one per cent of the sample practise low levels of devolvement of HRM to line managers.
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Table 6: Primary Responsibility for Major Decisions on Personnel Issues
Personnel Issues Line Line Mgt in IIR Dilpt. inHRDept. Consultation COllSuJtationRelated to: Mgt. wi!il1lB.l)llUt. withLineMat. PayandBenefits 48.3 14.3 11.0 26.4 Recruitment andSelection 17.2 12.9 34.4 35.5 Training andDevelopment 15.1 18.3 22.5 44.1 Performance Aonraisal 17.5 6.9 30.4 45.2 Industrial Relations 36.3 13.2 25.3 25.2 Health andSafety 18.5 32.6 19.6 29.3 Workforce 19.4 19.4 44.1 17.1Expansion/Reduction WorkSystem/Job Design 7.6 33.7 40.2 18.5 Figures in the above cells represent validpercentage, calculated after excluding the missing values.
Table 7: Change in Responsibility of Line Management for Different Personnel Issues
PellSonnelIssues Increased (%) Same(%) Decreased (%) PayandBenefits 27.2 65.2 7.6 Recruitment and Selection 43.5 48.9 7.6 Training andDevelopment 69.6 23.9 6.5 Performance Appraisal 60.0 37.8 2.2 Industrial Relations 28.9 63.3 7.8 HealthandSafety 61.5 35.2 3.3 Workforce 38.9 54.4 6.7Expansion/Reduction WorkSystem/Job Design 43.3 53.3 3.3
The results confirm the relevance of the 5-P model of HRM in British organizations. They also help to examine the main emphasis of Brewster's  European model of HRM, i.e, the linkages between corporate strategy and HRM strategy.
Overall, the results show a mixed picture, i.e. from strong to moderate applicability of the mentioned HRM models in Britain. The study aimed to examine HRM in context, and the findings should be useful for relevant policy makers. In particular, it seems that the sample firms are practising a relatively low level of devolvement in comparison to the integration function. Ifthe HRM function is to become more strategic, then the level of practice of both these concepts has to increase. Such demands are likely to increase in future as more and more firms restructure and become lean in order to respond to competitive and other pressures .
The study has two main limitations. First, it is restricted to six industries ofthe UK manufacturing sector. Second, the views ofonly top
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personnel specialists were examined. In order, therefore, to obtain a more comprehensive picture, research needs to be extended to other business sectors and to the views of other key actors (such as line managers). Future research could also build upon this study by investigating other models ofHRM and their applicability in different national contexts.
Table 1: Factors Determining HRM Practices in British Organizations
Independent. lJependentVariables If BiJta . t·valueVarin/J/es Training and development 0.2102 0.2984* 2.3790
Introductory through planned iob rotation lifecycle stage Communication through 0.1629 -0.2663* -2.0720immediate superior Turnaround Recruiting managerial staff by 0.3695 -0.3038* -2.6170lifecycle stage advertising externally
Recruiting managerial staff by 0.3695 0.3658** 3.0590 Less than 499 advertising externally employees Recruiting clerical staff from 0.1014 -0.3184* -2.4220
recruitment agencies Between 500- Recruiting clerical staff as 0.3337 0.2891* 2.4600599 employees apprentices Between 1000- Training and development 4999 through assessment centres 0.2607 0.3547** 2.8530 employees
Recruiting managerial staffby 0.1563 -0.2835* -2.1800advertising internally Recruiting professionals/technical staffby 0.1039 0.3223* 2.4550use of search/selection
More than consultants
5000 Recruiting manual staffby 0.3698 -0.4529** -3.9340
employees word ofmouth Training and development through formal career plans 0.1406
Training and development 0.1685 0.4105** 3.2460through succession plans Training and development 0.2102 0.3873** 3.0880though planned job rotation
Public Limited Recruiting managerial staff by 0.3695 0.4436** 3.8050Company advertising externally Recruiting managerial staff 0.0830 -0.2881* -2.1700from current employees
State-owned Recruiting clerical staff from 0.2842 -0.2583* -2.0650organization current emnlovees Recruiting manual staffby 0.3698 -0.3342** -2.9100word of mouth
Organizations incorporated Commnnication through trade 0.7445 -0.216** -3.0370between 1869- unions or work councils 1899 Organizations incorporated Recruiting manual staff from 0.1557 0.2609* 2.0240between 1900- current employees 1947
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Table 1 Continued:
Independent lJepen4ent Variables .Jf Beta tvalueVariable Recruitingclericalstaffby 0.2465 -0.3931** -3.2110advertising externally Recruitingmanualstaffby 0.1974 -0.2767* -2.1550advertising externally
Organizations Traininganddevelopment 0.2607 0.4364** 3.3780incorporated throughassessment centres between1948- Communication through 0.1629 -0.3255* -2.53201980 immediatesuperior
No formalcommunication 0.3517 0.3265** 2.7370methods Communication through 0.0858 0.2929* 2.2090suggestion box(es) Recruitingclericalstaff from 0.2842 -0.3019* -2.4240currentemployees
Cost reduction Recruitingclericalstaff as 0.3337 0.4182** 2.9450HRstrategy apprentices Recruiting manualstaff as 0.1330 0.3646** 2.8240apprentices
Talent Recruitingmanualstaffby 0.3698 -0.3655** -3.2440improvement word of mouthHRstrategy Recruiting managerial staffby
0.0777 0.2787* 2.0930use of search/selection Talent consultants acquisition HR Recruitingmanualstaff from 0.0914 0.3024* 2.2880strategy recruitmentagencies
Traininganddevelopment 0.2607 0.2857* 2.2090throughassessment centres Effective Recruitingclericalstaffas 0.3337 0.2882* 2.0300resourceHR apprenticesstrategy
Recruitingmanagerial staffby 0.3695 0.3593** 2.9750advertising externally Recruitingmanualstaffby 0.1226 0.3502** 2.6960Unionised advertising internally
firms Communication through 0.3517 -0.255* -2.1820attitudesurvey Communication throughtrade 0.7445 0.5656** 6.4000unionsor work councils
*Significance at .05 level; **Significance at .01 level
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Table 2: Influence of Different Aspects of National Factors on HRM
Aspectsoff"lational (;ultttre No. ofCases Mean 1 Way in which managers are socialised 84 18.07 2 Common values, norms ofbehaviour and customs 81 20.28 3 The influence ofpressure groups 58 10.47
4 Assumptions that shape the way managers perceive and 84 25.98think: about the organization
5 The match to the organization's culture and 'the way we 86 35.58do things around here' N(ltif.}1Inl T- o '011.6
1 National Labour Laws 82 40.91 2 Trade Unions 61 21.72 3 Professional Bodies 56 15.11 4 Educational and Vocational training set-up 84 27.62 5 International Institutions 54 20.07
A~l1ects QflIusinessEnvironment 1 Increased national/international competition - 72 27.56Globalisation of corporate business structure
Growth ofnew business arrangements, e.g. business 2 alliances, joint ventures and foreign direct investment 66 19.01
through mergers and acquisitions
3 More sophisticated information/communication 70 19.62technology or increased reliance on automation
4 Changing composition of the workforce with respect to 48 12.39gender, age, ethnicity and changing employee values
5 Downsizing of the workforce and business re-
6 Heightened focus on total management or customer 78 26.92satisfaction Aspects qfBusinessSector
1 Common strategies, business logic and goals being 71 22.95pursued by firms across the sector
2 Regulations and standards (e.g. payments, training, 79 20.35health and safety) specific to your industrial sector Specific requirement/needs of customers or suppliers
3 that characterise your sector (i.e. supply chain 82 28.96 management)
4 The need for sector-specific knowledge in order to 56 15.35provide similar goods/services in the sector
5 Informal or formal benchmarking across competitors in 61 16.39the sector (e.g, best practices ofmarket leaders) Cross-sector co-operative arrangements, e.g, common
6 technological innovations followed by all firms in the 37 10.54 sector
7 Common developments in business operations and work 49 14.40practices dictated by the nature of the business
8 A labour market or skill requirement that tends to be 39 13.10used by your business sector only
Respondentswereaskedto allocatea totalof100points to the different aspectsoftheabove nationalfactors.
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