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The Impact of an Innovative Human Resource Function on Firm Performance: the Moderating Role of Financing Strategy

Author

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  • J Dawson
  • Neal Knight-Turvey
  • Andrew Neal
  • M West

Abstract

The current study examined the impact of the human resource function and financing strategyon the financial performance of 104 UK manufacturing firms. Hypotheses are drawn from aresource-based perspective on human resource management and a financial theoryperspective on capital structure. Results show that an innovative HR function is significantlyrelated to economic performance. However, the relationship between an innovative HRfunction and economic performance was moderated by the firm¿s financing strategy. Firmsobtained higher returns from an innovative HR function when pursuing a low leveraging(debt) financing strategy, a finding consistent with modern finance theory notions that firmspecificstrategic assets provide greatest value when financed primarily through equity asopposed to debt.

Suggested Citation

  • J Dawson & Neal Knight-Turvey & Andrew Neal & M West, 2004. "The Impact of an Innovative Human Resource Function on Firm Performance: the Moderating Role of Financing Strategy," CEP Discussion Papers dp0630, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp0630
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    References listed on IDEAS

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    More about this item

    Keywords

    human resource function; manufacturing; firm performance; asset characteristics;
    All these keywords.

    JEL classification:

    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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