Abstract:
the purpose of this study is to examine the relationship between HR practices
and ®rm performance in a way that improves the causal inferences that can be drawn.
This article goes beyond previous work in three ways. First, it examines the
phenomenon at the business unit level, thus minimising the amount of potential
`noise’ introduced when studying more heterogeneous HR systems across various
businesses within corporations. Secondly, it uses more proximal measures of business
unit performance rather than only the distal profitability or stock price measures. Finally, it uses a predictive research design enabling more con®dent causal inference
