To Thine Shareholders Be True? Linking Large Corporate Ownership to Firms’ Use of Commitment Human Resource Practices

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2 Citations (Scopus)

Abstract

Human resource practitioners and academics have increasingly realized the importance of corporate governance for firm human resource activities. This study investigates how one important form of corporate governance, namely, ownership within large, publicly traded firms, is associated with a firm's use of commitment human resource practices (CHRPs), specifically, the use of incentive compensation, profit sharing, and participative decision making. Our findings indicate that the types of large investor, namely, family and institutional, are differentially associated with the likelihood of the firm using these CHRPs. Specifically, family owners with their long-term investment horizon, as well as their stakeholder orientation, increase the likelihood of the firm using these practices. In contrast, large institutional owners with their shorter-term investment horizon, as well as their investor orientation, decrease the likelihood of the firm using these practices. Furthermore, among institutional investors, transient institutional investors are negatively associated with these practices, while dedicated institutional investors are not associated with these practices. Taken together, our results regarding the positive association of family ownership and this subset of CHRPs and the negative association of transient institutional investors and this set of practices, have important implications for human resource professionals who not only need to understand how ownership affects HR practices but also how to articulate the value of these investments in order to attract investors.

Original languageEnglish (US)
Pages (from-to)567-589
Number of pages23
JournalHuman Resource Management
Volume55
Issue number4
DOIs
StatePublished - Jul 1 2016

Fingerprint

Shareholders
Ownership
Personnel
Compensation and Redress
Human Activities
Motivation
Decision Making
Human resource practices
Corporate ownership
Profitability
Decision making
Institutional investors
Investors
Human resources

Keywords

  • corporate governance
  • stakeholders
  • strategic HR

ASJC Scopus subject areas

  • Applied Psychology
  • Strategy and Management
  • Organizational Behavior and Human Resource Management
  • Management of Technology and Innovation

Cite this

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abstract = "Human resource practitioners and academics have increasingly realized the importance of corporate governance for firm human resource activities. This study investigates how one important form of corporate governance, namely, ownership within large, publicly traded firms, is associated with a firm's use of commitment human resource practices (CHRPs), specifically, the use of incentive compensation, profit sharing, and participative decision making. Our findings indicate that the types of large investor, namely, family and institutional, are differentially associated with the likelihood of the firm using these CHRPs. Specifically, family owners with their long-term investment horizon, as well as their stakeholder orientation, increase the likelihood of the firm using these practices. In contrast, large institutional owners with their shorter-term investment horizon, as well as their investor orientation, decrease the likelihood of the firm using these practices. Furthermore, among institutional investors, transient institutional investors are negatively associated with these practices, while dedicated institutional investors are not associated with these practices. Taken together, our results regarding the positive association of family ownership and this subset of CHRPs and the negative association of transient institutional investors and this set of practices, have important implications for human resource professionals who not only need to understand how ownership affects HR practices but also how to articulate the value of these investments in order to attract investors.",
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