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

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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.

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Notes

  1. There was a total of 1,093 joint stock enterprises (JSE) in the full sample. We compared the distribution of the full JSE sample and the reduced sample used in the analysis, using the sample variables as in the previous analysis and found close similarities in the distributions. These data are available from the authors on request.

  2. GFI and AGFI values above 0.9 represent a reasonably good fit. RMSEA below the level of 0.05 is considered to be a good fit.

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Acknowledgements

The authors gratefully acknowledge the International Labor Office in making available results from their Ukrainian Labor Force Survey. They thank Guy Standing, Azfar Khan and Laszlo Zsoldos for their personal support and participants at the ILO conference on Ukrainian Labor Market Flexibility in Kiev, April 2001, and the Academy of International Business, Monterrey, USA, July 2003, for their comments. Of course, the authors are responsible for remaining errors and omissions, but we would like to thank our JIBS Departmental Editor, Professor Anand Swaminathan and four anonymous reviewers for their constructive criticisms and ideas.

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Authors and Affiliations

  1. Graduate School of Business, De Montfort University, Leicester, U.K.

    T Buck

  2. Bradford University School of Management, Bradford, U.K.

    I Filatotchev

  3. Center for Research in Enterprise in Emerging Markets, Nottingham University Business School, Nottingham, U.K.

    N Demina & M Wright

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  1. T Buck
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  2. I Filatotchev
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  3. N Demina
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  4. M Wright
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Corresponding author

Correspondence to T Buck.

Appendices

Appendix 1

Sample and population comparisons (see Table 6).

Table a1 Distribution of work force (number of employed) over industrial sectors, %
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Appendix 2

Sample description (see Table 7).

Table a2 Industrial sectors and ownership form (%)
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Buck, T., Filatotchev, I., Demina, N. et al. Insider ownership, human resource strategies and performance in a transition economy. J Int Bus Stud 34, 530–549 (2003). https://doi.org/10.1057/palgrave.jibs.8400065

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