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

J Dawson, Neal Knight-Turvey, Andrew Neal and M West

CEP Discussion Papers from Centre for Economic Performance, LSE

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.

Keywords: human resource function; manufacturing; firm performance; asset characteristics (search for similar items in EconPapers)
JEL-codes: J24 J5 J51 J71 M11 M12 (search for similar items in EconPapers)
Date: 2004-04
New Economics Papers: this item is included in nep-cfn and nep-lab
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Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp0630

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