The mediating effects of psychological contracts on the relationship between human resource management systems and organisational performance

Abstract

Purpose – The purpose of this paper is to investigate the impact of human resource management (HRM) systems (expressed by content, process and climate) on organizational performance through the mediating role of psychological contracts (expressed by employer and employee promises fulfilment). Design/methodology/approach – The study examines theoretical relationships in the Greek context, based on structural equation modelling (SEM) estimation, using a sample of employees from both private and public sector organizations. Findings – The study finds that the impact of HRM content on organizational performance is less strong compared to its impact through HRM process. Additionally, the study finds that psychological contract partially and positively mediates the HRM – performance relationship, where the impact of HRM on organizational performance through employee promises fulfilment is stronger than that through employer promises fulfilment. Research limitations/implications – The study does not allow for appropriately investigating dynamic causal inferences due to the cross-sectional nature of data. Additionally, considering that Greece is experiencing a severe economic and financial crisis, the findings from this unique context may not generalize across borders. Practical implications – For improving organizational performance, managers and decision makers should make their HRM systems more visible, understandable, legitimate and relevant. At the same time they should make HRM systems more instrumental, valid and consistent of HR messages. Originality/value – Investigations into the relationship between HRM systems and organizational performance have become increasingly common. Nevertheless, empirical studies that measure the influence of HRM systems, which integrate both content and process, on organizational performance are still rare. This paper partially fills this gap.