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Methodological Issues in Cross‐Sectional and Panel Estimates of the Human Resource‐Firm Performance Link

Methodological Issues in Cross‐Sectional and Panel Estimates of the Human Resource‐Firm... Because companies differ in factors such as management ability that may lead to both high performance work systems and enhanced firm performance, conventional estimates of the effects of human resource (HR) management practices on firm performance may be biased upward. Alternatively, if HR management practices are measured with error, estimates of their effects on firm performance may be biased downward. We find that although longitudinal estimates that avoid the first source of bias are substantially smaller than cross‐sectional estimates, the former are strongly influenced by errors in measuring HR management practices. Based on independent estimates of the measurement error, we calculate a range of estimates that correct for both biases. We estimate that a one standard deviation increase in our measure of high performance work systems raises the market value of the corporation by approximately $15,000 per employee. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Industrial Relations Wiley

Methodological Issues in Cross‐Sectional and Panel Estimates of the Human Resource‐Firm Performance Link

Industrial Relations , Volume 35 (3) – Jul 1, 1996

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References (28)

Publisher
Wiley
Copyright
Copyright © 1996 Wiley Subscription Services, Inc., A Wiley Company
ISSN
0019-8676
eISSN
1468-232X
DOI
10.1111/j.1468-232X.1996.tb00413.x
Publisher site
See Article on Publisher Site

Abstract

Because companies differ in factors such as management ability that may lead to both high performance work systems and enhanced firm performance, conventional estimates of the effects of human resource (HR) management practices on firm performance may be biased upward. Alternatively, if HR management practices are measured with error, estimates of their effects on firm performance may be biased downward. We find that although longitudinal estimates that avoid the first source of bias are substantially smaller than cross‐sectional estimates, the former are strongly influenced by errors in measuring HR management practices. Based on independent estimates of the measurement error, we calculate a range of estimates that correct for both biases. We estimate that a one standard deviation increase in our measure of high performance work systems raises the market value of the corporation by approximately $15,000 per employee.

Journal

Industrial RelationsWiley

Published: Jul 1, 1996

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