Strategic Hrm In India

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The last decade of empirical research on the added value of HRM, widely known as the "HRM and performance" debate, demonstrates evidence that the role of HRM is vital (Huselid, 1995; MacDuffie, 1995; Guest et al. 2003; Wright et al. 2003; Paauwe and Boselie, 2005, Boselie et al., 2005; Paauwe, 2009). Guest (1987) based his normative theoretical model on the assumption that HRM is distinctly different from Personnel management and is closely linked strategically to the business, and focussing on HRM outcomes like commitment, flexibility and quality. The HRM outcomes in turn are expected to contribute to a range of positive organizational outcomes, including high firm performance, low turnover, low absence, and high cost-effectiveness (Arthur, 1994; Huselid, 1995; Guthrie, 2001; Subramony, 2009) through optimum utilization of human resources. Empirical research had confirmed a relation between HRM practices (whether as individual practices or as a bundle) and organizational performance (Paauwe, 2009).

Background: Choice of country

This study aims at examining the effects of HRM practices on performance in India. India is an emerging market prompted institutions such as the World Bank to forecast that India will become the world's fourth largest economy by 2020 (Budhwar and Varma, 2010). The increasing focus on India has been. India has been growing As the volume and sophistication of research in HRM has grown, the review aims to compare the studies in India with the existing empirical research predominantly in USA and UK. To achieve this objective, an extensive body of literature is reviewed from a theoretical and methodological perspective. A number of studies have explored the impact of HRM practices on firm performance in other countries like US, UK etc. (e.g. Huselid, 1995; Becker and Grehart, 1996; Ichniowski et al., 1997; Becker and Huselid, 1998; Wood, 1999). However, the studies in India in this field are limited.

The following research questions were posed.

How have HRM practices been operationalised?

How has the concept of performance been operationalised?

What has been the dominant theoretical perspective that has been adopted?

Which external variables were incorporated into the research design, whether as controls or as contingent moderating variables?

What was the sample sector have been the main research targets (e.g. individuals, workplaces, industries or sectors etc.)?

Who are the respondents (e.g. Single rater vs multiple raters per unit of analysis or Single vs multiple actors?

What methods have been used (e.g. case study, survey, interviews, large scale secondary data etc.)?

Does the study deal with how HR practices linkages with performance (Black Box problem)?

What are some of the areas future research should focus on?


Scope of the review

The review focuses on the research that has been published between 1994 and 2010. The Indian economy adopted a structural adjustment programme at the beginning of 1991. The structural adjustment programme or liberalization initiated the process of the opening up of an otherwise closed economy of India (Som, 2008). Thereby, an increasing need to understand HRM practices in India since the 1990s emerged since liberalisation of economic policies took place (Budhwar and Sparrow, 1997).

There are three important criteria used in selecting articles for review. First, the articles should have analysed data from workplaces in India. Second, the articles should have used HRM practices and firm performance as variables. Third, the articles have to be published in journals in English. The review excludes research published in books, conference proceedings, unpublished dissertations and non-English-language journals.

Identification of articles

There are 50 articles in total which study the impact of HRM practices in India. Key journals known for their HR focus (eg Human Resource Management, International Journal of Human Resource Management, Personnel Psychology and Personnel Review); and general management journals (eg Academy of Management Journal, Administrative Science Quarterly, Journal of Management, Journal of Management Studies, British Journal of Management, Organisation Studies and Strategic Management Journal) and industrial relations journals (eg Industrial Relations, British Journal of Industrial Relations and Industrial and Labor Relations Review) were separately searched for these keywords. Articles from HR and general management journals specifically aimed at Asia-Pacific and India, such as Singh (2004) in Asia Pacific Journal of Human Resources were also included. Attention was also drawn to special issues by journals aiming at India and Asia/ Asia Pacific. This criterion also . Empirical studies with specific focus on India and Asia have been presented in special issues of international journals like Journal of World Business (39(4), 2004), Employee Relations (29 (6), 2007), Human Resource Management (47 (1), 2008; 49 (3), 2010), The International Journal of Human Resource Management 2010 Human Resource Management in the New Economy in India.

Characteristics of the reviewed studies:


Author and Year


Operationalisation of HRM

Measure of performance

Theoretical perspective

Sample characteristics and time period

Analytical method

Summary of findings


Som (2008)

International Journal of Human Resource Management, 19 (7), 1278- 1297


retraining and redeployment, performance appraisal and compensation and reward practices (Based on Boselie et al., 2005)

Perceived organizational performance, is adapted from Khandwalla's (1977) study and is used to operationalised the index of relative performance (Bae and Lawler

2000; Khandwalla 2002).


Chand and Katou (2006)


Chand (2010)


Paul and Anantharaman (2003)


Singh (2003)


Nagaraj and Kamalanabhan (2006)

A Study on the Impact of Strategic Human Resource Practices on Organizational Performance

Journal of Transnational Management, 1547-5786, Volume 10, Issue 4, 2006, Pages 73 - 97


Khandekar and Sharma (2005)

Education þ Training

Vol. 47 No. 8/9, 2005

pp. 628-639

Two stage study

HRM practices are positively correlated to

organisational performance.


Stumph et al. (2010)

Human Resource Management, May-June 2010, Vol. 49, No. 3, Pp. 353- 375

Journal of World Business, Apr2010, Vol. 45 Issue 2, p109-121


Cooke and Saini (2010a)

Human Resource Management, May-June 2010, Vol. 49, No. 3, Pp. 377- 400


Agarwala (2003)

HRM practices

lower employees' intention to leave, but this relationship may not be direct. HRM

practices actually make the employees more committed to the organization, and this

enhanced commitment level lowers their turnover intention.


Guchait and Cho (2010)

The International Journal of Human Resource Management, 21: 8, 1228 - 1247

Low turnover


Krishnan and Singh (2010)

Human Resource Management, May-June 2010, Vol. 49, No. 3, Pp. 421- 437

Performance orientation mediates the relationships

between intention to quit and organizational citizenship behaviour as

well as between intention to quit and organizational deviance.


Cooke and Saini (2010b)

Human Resource Management, May-June 2010, Vol. 49, No. 3, Pp. 477- 500


Shahnawaz and Juyal (2006)

Journal of the Indian Academy of Applied Psychology

July 2006, Vol. 32, No. 3, 171-178.

HRM practices were significantly predicting organisational commitment and also when they were combined.

Performance appraisal and 'attitudes towards HRM department' were the significant predictors of organizational commitment in the both the organizations.


Ketkar and Sett (2010)

The International Journal of Human Resource Management,

Vol. 21, No. 8, June 2010, 1173-1206

HR practices as a system have both

direct and indirect (mediated by behavioural flexibility) effects on firm-level HR outcomes.


Sharma (2008)

Journal of Applied Management and Entrepreneurship; Jul 2008; 13, 3

Service quality


Kasturi et al. (2006)

International Journal of Commerce &Management; 2006; 16, 3/4


SamGnanakkan (2010)

Journal of Management Research

Vol. 10, No. 1, April 2010, pp. 39-61

HR practices - compensation and training, has a significant direct effect on TOI and the contribution of organizational commitment to TOI is observed when combined with HR practices in the model.

S. No

Author and Year

Level of analysis

Research Method


Sample size

Industry type

HR Practices

Analytical approach



Som (2008)


Quantitative (Survey)

Multiple respondents (Managing Director/Director/Vice President/General


69 firms from sample size of 194 organizations.

Large, medium and small sized organizations both from the private and the public sector.


retraining and redeployment, performance appraisal and compensation and reward practices (Based on Boselie, 2005)

Principal component factor analysis with varimax rotation

Regression analysis

The survey found that the innovative recruitment and compensation practices have a positive significant relationship with firm performance. It was observed that recruitment, the role of the HR department and compensation practices seem to be significantly changing within the Indian firms in the context of India's economic liberalization. The synergy between innovative HRM practices was not significant in enhancing corporate performance during the liberalization process.


Budhwar and Sparrow (1997)

Quantitative (Survey) supplemented by Qualitative interviews

137 companies

Discriminant analysis

Results show a low level of integration and devolvement practised in Indian organizations. A number of contingent variables and organizational policies were found to determine the levels of integration and devolvement in Indian organizations. India is mapped on the integration devolvement matrix of ten European countries, showing similarities with the UK, Italy and Germany.



Rao et al. (2000)

Managers have to adapt selectively to firms depending on the

basis of a firms ownership structure.


Singh (2003)


Quantitative (Survey)

Senior HR executives (director or


84 firms, out of a sample size of

359 firms. Overall response rate was 23.40 per cent.

No. of organizations from manufacturing sector: 70 (83%)

No. of organizations from service sector; 14 (17%)

Mean: 3,282 employees

Minimum: 105 Maximum: 22,000

Strategic HR orientation is defined as the alignment of 6 variables (HR planning, selection, performance evaluation, compensation, development, staffing practices) with the business strategies of the firm.

Multiple regression


There is a significant relationship between strategic HR orientation and firm performance.


Paul and Anantharaman (2003)

35 firms

Software companies


firms in the IT industry showed that

training, job design, compensation, and incentives

have a direct impact on operational

performance outcomes such as employee retention,

employee productivity, product quality, speed of delivery, and operating cost.


Budhwar and Boyne (2004)

137 firms

Large manufacturing firms

The gap between the Indian

private and public sector HRM practices (structure of HR department, role of HR in corporate

change, recruitment and selection, pay and benefits, training and development, employee

relations and key HRM strategies) is not very significant but in a few functional areas

(compensation, training and development), private-sector firms have adopted a more rational approach than their public sector counterparts.


Budhwar and Khatri (2001)


Lawler et al. (1995)


Quantitative (Survey)

68 firms in Thailand and 105 firms in India

large-scale, modern-sector organizations

Staffing, training, compensation and evaluation

Logit model


Björkman et al. (2008)

Mixed methodology comprising a questionnaire survey as well as in-depth interviews

HR manager/ director and

General manager/ president.

170 Western-owned

Subsidiaries (87 European-owned units in China and 83 European-owned units in India)

OLS regression analysis

The results indicate clear differences between HRM characteristics in Western-owned units in China and India, and suggest that the use of expatriates and the background of the HR managers are important determinants of subsidiary HRM.


Som (2007)


A Study on the Impact of Strategic Human Resource Practices on Organizational Performance

I. R. Nagaraj; T. J. Kamalanabhan

Journal of Transnational Management, 1547-5786, Volume 10, Issue 4, 2006, Pages 73 - 97


Human resource management practices in Indian hospitality enterprises: an empirical analysis

Mohinder Chand

Managing Leisure, 1466-450X, Volume 15, Issue 1, 2010, Pages 4 - 16


The role of human resource management in international joint ventures: a study of Australian-Indian joint ventures

Sharif N. As-Saber; Peter J. Dowling; Peter W. Liesch

The International Journal of Human Resource Management, 1466-4399, Volume 9, Issue 5, 1998, Pages 751 - 766


Kuldeep Singh 

Human Resource Development International, 1469-8374, Volume 6, Issue 1, 2003, Pages 101 - 116


The Impact of Strategic Human Resource Management on Firm Performance, HRM Review, Sambhavi Sharma, May 2004


Budhwar, P. S. (2000), Determinants of HRM Policies and Practices in India: An Empirical Study, Global Business Review, 1(229)


HRM Practices in Insurance Companies: A Study

of Indian and Multinational Companies

Subhash C. Kundu

Divya Malhan, Managing Global Transitions 7 (2): 191-215


Kasturi (2006)

Quantitative (Survey)

44 firms (SMEs in Tamil Nadu)


HRM philosophy


The attitude of the firm owners towards employees is significant in determining the firm's profitability. The effect of HR philosophy on productivity is smaller, yet significant.


Chand and Katou


Quantitative (Survey)




usable questionnaires were received, 265 chain hotels and 174 non-chain hotels, a

response rate of approximately 52 per cent

Hotel industry

27 HRM practices


The impact of HRM practices on organizational

performance in the Indian hotel industry also showed that hotel performance was positively related to good HRM practices.


Agarwala (2003)

Phase 1: preliminary investigation

Phase 2: questionnaire survey

422 executives and managers from seven organizations

14 HR strategies e.g. employee acquisition strategies, employee retention strategies, compensation and incentives, benefits and services, rewards and recognition, technical training, management development, career planning and development, performance appraisals, potential development, succession planning, employee relations, employee exit and separation management and adopting responsibility for socially relevant issues.


multiple regression analysis

The perceived extent of introduction of innovative human resource practices by the organizations was the most significant predictor of organizational commitment.


Chand (2010)

Quantitative (Survey)

HR managers, employees and customers

52 hotels 52 HR managers 260 employees (5 from

each hotel) and 260 customers (5 from each hotel).

Hotel industry

27 existing HRM practices


HRM practices improve hotel service effectiveness and in consequence firm performance replicates and extends in a HRM context research.


Singh (2004)

Quantitative (Survey) using Total design method

Person heading HR (Director/ President/ VP)

82 firms out of a sample of 359 firms (22.84 percent response rate)

Representative of major domestic industries

Selection system, job definition, training system, performance appraisal system, compensation system, career planning system, employee participation system

Regression analysis

There is a significant relationship between training and compensation and perceived organisational and market performance of a firm.


Kumar (2009), HRM practices in cement industries in India: A case of India Cements Limited, Asia Pacific Journal of Social Sciences I (2), pp. 154-173

The table shows that most of the studies


Name of journal

Number of articles

The International Journal of Human Resource Management


International Business Review

Employee Relations

Human Resource Management

Indian Journal of Industrial Relations

Thunderbird International Business Review

The Columbia Journal of World Business

Global Business Review

Management and Labor Studies

Journal of Labor Research

Management International Review

Organisation Studies

Research and Practice in Human Resource Management

International Journal of Manpower

VISION: The Journal of Business Perspective


Journal of World Business

The Learning Organization

International Journal of Education Economics and Development