Insider ownership, human resource strategies and performance in a transition economy

T Buck, I Filatotchev, N Demina and Mike Wright
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T Buck: Graduate School of Business, De Montfort University, Leicester, U.K.
I Filatotchev: Bradford University School of Management, Bradford, U.K.
N Demina: Center for Research in Enterprise in Emerging Markets, Nottingham University Business School, Nottingham, U.K.

Journal of International Business Studies, 2003, vol. 34, issue 6, 530-549

Abstract: Researchers and potential investors in transition economies need to understand the Human Resource Management (HRM) strategies of target firms, since human resources are arguably their most valuable assets. Understanding is difficult, however, because HRM strategies help to determine firms' performance, but are in turn influenced by corporate governance, particularly insider ownership. This paper employs a structural equation modeling methodology to examine the relations between governance, HRM strategies and performance in the context of a novel dataset of Ukrainian industrial firms. It is found that insider ownership is positively associated with high-commitment HRM strategies and negatively with low-commitment, cost-cutting HRM strategies. Cost-cutting HRM strategies are in turn associated with weaker firm performance. These outcomes correspond broadly with theoretical expectations. Journal of International Business Studies (2003) 34, 530–549; doi:10.1057/palgrave.jibs.8400065

Date: 2003
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