Demonstrating Causation: The Key to Next Generation Strategic Human Resource Management Research

Abstract

In response to the longstanding and repeated criticisms that the corporate human resources function does not add value to organizations, the past ten years has seen a burgeoning of research attempting to demonstrate that progressive HR practices result in higher organizational performance. In 1995, a groundbreaking study demonstrated that HR practices referred to as High Performance Work Systems (HPWS) were related to accounting profits and the market value of firms.1 Since then, numerous studies have shown similar positive relationships between progressive HR practices and measures of firm performance.Studies in what I call “first generation”strategic human resource management (SHRM) research have produced an increasingly convincing body of evidence on the connection between HR practices and performance, but they lack sufficient data to demonstrate a causal relationship. The “next generation” of SHRM research, which has already begun, will focus on two aspects: demonstrating the HR value chain, and proving causality.