Strategic Human Resource Management in European Transition Economies:
Building a Conceptual Model on the Case of Slovenia
Nada Zupan and Robert Kaše
Abstract: The general SHRM models explain the link between HR and company performance, however, due to several specific internal and external factors they have to be modified in order to be applied to companies in European transition economies (ETEs). By analysing the current state of HRM and the HR context in Slovenia, we develop a conceptual SHRM model for ETEs. The model introduces a new specification of the HR context, emphasizing HR Facilitators, and an additional moderating construct the HR Power, to have more explanatory power for studying the HR-company performance link in ETEs. The paper also addresses the importance and issues relating to the empirical validation of the model in ETEs and suggests ways to further develop SHRM in these countries.
Keywords: human resource management, conceptual model, transition economies, HR strategy, performance, Slovenia, Central and Eastern Europe.
Searching for ways to increase competitiveness is a dominant theme in the modern business world. With the acknowledgement that human resources can be one of the key contributors in this quest, the field of strategic human resources management (SHRM) has gained legitimacy and attention. The early writings on SHRM go back to the early 1980s and were dominated by US authors, such as Dyer (1984), Beer et al. (1984) and Fombrum et al. (1984). Their efforts primarily aimed to explain the role of human resources in improving company performance and to design models of various contextual and HRM elements in establishing the HR-company performance link. In the 1990s the focus of US research shifted to which particular HRM processes and practices, and how they are actually integrated, add value and contribute to company performance (e.g. Wright and McMahan, 1992; Wright et al., 1994; Huselid, 1995; MacDuffie, 1995; Becker and Gerhart, 1996; Delery and Doty, 1996; Youndt et al., 1996; Huselid et al., 1997; Wright and Snell, 1998; Delery, 1998; Lepak and Snell, 1999; 2002; Wright et al. 2001). Early in the same decade, the European response from mostly UK authors raised the question of whether the US models could be applied in Europe, emphasising that European enterprises operate in a different contextual setting involving the stronger role of the state and trade unions as well as public sector enterprises, different cultures and traditions (e.g. Guest, 1990; 1991; Brewster, 1995). Western European research in strategic HRM gained momentum towards the second half of the 1990s, mostly describing HR as it is embedded in various national contexts and thereby emphasising the firm-external perspective rather than the firm-internal perspective mostly found in the US research (e.g. Camuffo and Costa, 1993; Hiltrop, 1996; Tyson, 1995; Guest, 1997; Paauwe, 1996; Boxall and Purcell, 2000; Boselie et al, 2001; Camelo et al., 2004; Cabral-Cardoso, 2004).
Nevertheless, there is still an important part of Europe about which we know very little in terms of human resource management. These are the so-called European transition economies (ETEs), meaning the Central and Eastern European countries that started their transition from centrally-planned (Soviet bloc) or labour-managed economies (ex Yugoslavia) to market economies at the start of the 1990s. We believe that knowledge about HRM in these transition countries is important for several reasons. ETE companies and their HRM operate in specific external and internal conditions due to the transition process, thus general SHRM models may not have sufficient explanatory power. Eight of ETE countries (Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia) joined the European Union (EU) in May 2004 and will bring their diversity into common EU market and institutions, while many others aspire to join in the...
References: Aghion, P., Blanchard, O. and Burgess, R. (1996) ‘The Behaviour of State Firms in Eastern Europe Pre-privatisation’, European Economic Review, 38 (6): 132-49.
Appelbaum, E. and Batt, R. (1994) The New American Workplace. Ithaca, NY: ILR Press.
Bangert, D. and Poor, J. (1993) ‘Foreign Involvement in the Hungarian Economy: It’s Impact on Human Resource Management’, The International Journal of Human Resource Management, 4(4): 817-40.
Becker, B.E. and Gerhart, B. (1996) ‘The Impact of Human Resource Management on Organizational Performance: Progress and Prospects’, Academy of Management Journal, 39(4): 779-801.
Becker, B.E., Huselid, M.A., Pickus, P.S. and Spratt, M.F. (1997) ‘HR as a Source of Shareholder Value: Research and Recommendations’, Human Resource Management, 36(1): 39-47.
Beer, M., Spector, B., Lawrence, P.R., Mills, D.Q. and Walton, R.E. (1984) Managing Human Assets. New York: The Free Press.
Bollen, K.A. (1989) Structural Equations with Latent Variables. New York: Wiley.
Boselie, P., Paauwe, J. and Jensen, P. (2001) ‘Human Resource Management and Performance: Lessons from the Netherlands’, The International Journal of Human Resource Management, 12(7): 1107-25.
Bowen, D.E., Galang, C. and Pillai, R. (2002) ‘The Role of Human Resource Management: An Exploratory Study of Cross-country Variance’, Human Resource Management, 41(1): 103-22.
Bowen, D.E. and Ostroff, C. (2004) ‘Understanding HRM-Firm Performance Linkages: The Role of the »Strength« of the HRM System’, Academy of Management Review, 29(2): 203-21.
Boxall, P. and Purcell, J. (2000) ‘Strategic Human Resource Management: Where Have We Come from and Where Should We Be Going?’, The International Journal of Management Reviews, 2(2): 183-203.
Boxall, P. and Purcell, J. (2003) Strategy and Human Resource Management. Hampshire: Palgrave MacMillan.
Brekić, J. (1983) Kadrovska teorija i praksa. Zagreb: Informator.
Brewster, C. (1995) ‘Towards a ‘European’ Model of Human Resource Management’, Journal of International Business Studies, 26(1): 1-21.
Brewster, C. (1999) ‘Strategic Human Resource Management: The Value of Different Paradigms’, Management International Review, 39: 45-64.
Brewster, C. and Hegewish, A. (1993) ‘Personnel Management in Europe: A Continent of Diversity’. Personnel Management, June 1993: 36-40.
Brewster, C., Mayrhofer, W. and Morley, M. (2000) New Challenges for European Human Resource Management. London: MacMillan Press.
Brewster, C., Mayrhofer, W. and Morley, M. (2004) Human Resource Management in Europe: Evidence of Convergence? Oxford: Elsevier.
Buck, T., Filatotchev, I., Demina, N. and Wright, M. (2003) ‘Insider Ownership, Human Resource Strategies and Performance in Transition Economy’, Journal of International Business Studies, 34: 530-49.
Cabral-Cardoso, C. (2004) ‘The Evolving Portuguese Model of HRM’, The International Journal of Human Resource Management, 15(6): 959-78.
Čakrt, M. (1993) ‘Management Training in Eastern Europe: Toward Mutual Understanding’, Academy of Management Executive, 7(4): 63-7.
Camelo, C., Martin, F., Romero, P.M. and Valle, R. (2004) ‘Human Resources Management in Spain: Is It Possible to Speak of a Typical Model?’, The International Journal of Human Resource Management, 15(6): 935 -59.
Camuffo, A. and Costa, G. (1993) ‘Strategic Human Resource Management – Italian Style’, Sloan Management Review, 34: 59-67.
Carlin, W., Van Reenen, J. and Wolfe, T. (1995) ‘Enterprise Restructuring in Early Transition’, Economics of Transition, 3(4): 427-59.
Carstensen, K. and Toubal, F. (2004) ‘Foreign Direct Investment in Central and Eastern European Countries: A Dynamic Panel Analysis’, Journal of Comparative Economics, 32 (1): 3-24.
Cheney, A.B. and Kozlowski, V. (1994) ‘The Involvement Approach: How Eastern Europe Can Best Build on Western Experience’, European Business Review, 94(3): 22-5.
Crow, M. (1998) ‘Personnel in Transition: The Case of Polish Women Personnel Managers’, Personnel Review, 27(3): 243-61.
Delery, J.E. (1998) ‘Issues of Fit in Strategic Human Resource Management: Implications for Research’, Human Resource Management Review, 8(3): 289-309.
Delery, J.E. and Doty, D.H. (1996) ‘Modes of Theorizing in Strategic Human Resource Management: Test of Universalistic, Contingency, and Configurational Performance Predictions’, Academy of Management Journal, 39(4): 802-35.
Dmitrovič, T. and Zupan, N. (2001) ‘The Consistency of Human Resource Management and Competitiveness Policy in Slovenian Companies’, South East Europe Review for Labor and Social Affairs, 4(3): 19-38.
Domadenik, P. and Prašnikar, J. (2004) ‘Enterprise Restructuring in the First Decade of Independence’. In Mrak, M., Rojec, M. and Silva-Jauregui, C. (eds) Slovenia: From Yugoslavia to the European Union. Washington: World Bank.
Dyer, L. (1984) ‘Linking Human Resource and Business Strategies’, Human Resource Planning, 7(2): 79-84.
Dyer, L. (1985) ‘Strategic Human Resources Management and Planning’. In Rowland, K.M. and Ferris, G.R. (eds) Research in Personnel and Human Resources Management, 3: 1-30.
Dyer, L. and Reeves, T. (1995) ‘Human Resource Strategies and Firm Performance: What Do We Know and Where Do We Need to Go?’, The International Journal of Human Resource Management, 6(3): 656-70.
Fahy, J., Hooley, G., Beracs, J., Fonfara, K., and Gabrijan, V. (2003) ‘Privatisation and Sustainable Competitve Advantage in the Emerging Economies of Central Europe’, Management International Review, 43(4): 407-29.
Fey, C.F., Engstrom, P. and Bjorkman, I. (1999) ‘Doing Business in Russia: Effective Human Resource Management Practices for Foreign Firms in Russia’, Organizational Dynamics, 28(2): 69-81.
Fey, C.F. and Bjorkman, I. (2001) ‘The Effect of Human Resource Management Practices on MNC Subsidiary Performance in Russia’, Journal of International Business Studies, 32(1): 59-75.
Fey, C.F., Bjorkman, I. and Pavlovskaya, A. (2000) ‘The Effect of Human Resource Management Practices on Firm Performance in Russia’, The International Journal of Human Resource Management, 11(1): 1-18.
Fombrum, C.J., Tichy, N. and Devanna, M.A. (1984) Strategic Human Resource Management. New York: Wiley & Sons.
Frydman, R., Gray, C., Hessel, M. and Rapaczynski, A. (1999) ‘When Does PrivatizationWork? The Impact of Private Ownership on Corporate Performance in Transition Economies’, The Quaterly Journal of Economics, 114(4): 1153-92.
Galang, M.C. and Ferris, G.R. (1997) ‘Human Resource Department Power and Influence through Symbolic Action’, Human Relations, 50(11): 1403-26.
Garavan, T., Morley, M., Heraty, N., Lucewicz, J. and Suchodolski, A. (1998) ‘Managing Human Resources in a Post-command Economy: Personnel Administration or Strategic HRM’, Personnel Review, 27(3): 200-12.
Gerhart, B., Wright, P.M., McMahan, G.C. and Snell, S.A. (2000) ‘Measurement Error in Research on Human Resources and Firm Performance: How Much Error Is There and How Does It Influence Effect Size Estimates?’, Personnel Psychology, 53(4): 803-34.
Gligorov, V. (2004) ‘Socialism and the Disintegration of SFR Yugoslavia’. In Mrak, M., Rojec, M. and Silva-Jauregui, C. (eds) Slovenia: From Yugoslavia to the European Union. Washington: World Bank.
Golden, K. and Ramanujam, V. (1985) ‘Between a Dream and a Nightmare: On the Integration of the Human Resource Function and the Strategic Business Planning Process’, Human Resource Management, 24: 429-51.
Grosfeld, I. and Roland, G. (1997) ‘Defensive and Strategic Restructuring in Central European Enterprises’, Journal of Transforming Economies and Societies, 3(1): 21-46.
Gray, C.W. (1996) ‘In Search of Owners: Privatization and Corporate Governance in Transition Economies’. The World Bank Research Observer, 11(2):179-198.
Guest, D.E. (1990) ‘Human Resource Management and the American Dream’, Journal of Management Studies, 27(4): 377-97.
Guest, D.E. (1991) ‘Personnel Management: The End of Orthodoxy’, British Journal of Industrial Relations, 29(1): 149-75.
Guest, D.E. (1997) ‘Human Resource Management and Performance: A Review and Research Agenda’, The International Journal of Human Resource Management, 8(3): 263-76.
Guest, D.E., Michie, J., Conway, N. and Sheehan, M. (2003) ‘Human Resource Management and Corporate Performance in the UK’, British Journal of Industrial Relations, 41(2): 291-314.
Hanel, U., Hegewish, A. and Mayrhofer, M. (1997) Personalarbeit in Wandel: Entwicklungen in den Neuen Bundeslandern und Europa. Munich: Rainer Hampp Verlag.
Hiltrop, J.M. (1996) ‘The Impact of Human Resource Management on Organisational Performance: Theory and Research’, European Management Journal, 14(6): 628-37.
Huselid, M.A. (1995) ‘The Impact of Human Resource Management Practices on Turnover, Productivity, and Corporate Financial Performance’, Academy of Management Journal, 38(3): 635-72.
Huselid, M.A. and Becker, B.E. (1996) ‘Methodological Issues in Cross-Sectional and Panel Estimates of the Human Resource-Firm Performance Link’, Industrial Relations, 35(3): 400-22.
Huselid, M.A., Jackson, S.E. and Schuler, R.S. (1997) ‘Technical and Strategic Human Resource Management Effectiveness as Determinants of Firm Performance’, Academy of Management Journal, 40(1): 171-88.
ILO (1995) ‘Insitutionalization of Tripartism in Central and Eastern Europe’, International Labour Review, 134(3): 417-27.
Inotai, A. and Stanovnik, P. (2004) ‘EU Membership: Rationale, Costs, and Benefits’. In Mrak, M., Rojec, M. and Silva-Jauregui, C. (eds.) Slovenia: From Yugoslavia to the European Union. Washington: World Bank.
Jackson, S.E. and Schuler, R.S. (1995) ‘Understanding Human Resource Management in the Context of Organizations and Their Environments’, Annual Review of Psychology, 46: 237-64.
Jankowicz, A.D. (1998) ‘Issues in Human Resource Management in Central Europe’, Personnel Review, 27(3): 169-76.
Kaše, R. and Zupan, N. (2004) ‘Managing Human Resources in Downsizing: Does Strategic Fit Matter?’. In Galetić, L. (ed) An Enterprise Odyssey: Building Competitive Advantage. Zagreb: Graduate School of Economics and Business.
Kelly, J. and Gennard, J. (1996) ‘The Role of Personnel Directors on the Board of Directors’, Personnel Review, 25(1): 7-24.
Kiriazov, D., Sullivan, S.E. and Tu, H.S. (2000) ‘Business Success in Eastern Europe: Understanding and Customizing HRM’, Business Horizons, 43(1): 39-43.
Köke, J. and Schröder, M. (2003) ‘The Prospects of Capital Markets in Central and Eastern Europe’, Eastern European Economics, 41(4): 5-37.
Koubek, J. and Brewster, C. (1995) ‘Human Resource Management in Turbulent Times: HRM in Czech Republic’, The International Journal of Human Resource Management, 6(2): 223-47.
Lepak, D.P. and Snell, S.A. (1999) ‘Human Resource Architecture: Toward a Theory of Human Capital Allocation and Development’, Academy of Management Review, 24(1): 31-48.
Lepak, D.P. and Snell, S.A. (2002) ‘Examining the Human Resource Architecture: The Relationship among Human Capital, Employment, and Human Resource Configurations’, Journal of Management, 28(4): 517-43.
Letiche, H. (1998) ‘Transition and Human Resources in Slovakia’, Personnel Review, 27(3): 213-26.
MacDuffie, J.P. (1995) ‘Human Resource Bundles and Manufacturing Performance: Organizational Logic and Flexible Production Systems in the World Auto Industry’, Industrial and Labor Relations Review, 48(2): 197-221.
Martin, R. and Cristescu-Martin, A. (2003) ‘Employment Relations in Central and Eastern Europe in 2002: Towards EU Accession’, Industrial Relations Journal, 34(5): 498-521.
May, R., Young, C.B. and Ledgerwood, D. (1998) ‘Lessons from Russian Human Resource Management Experience’, European Management Journal, 16(4): 447-60.
Miles, R.E. and Snow, C.C. (1984) ‘Designing Strategic Human Resources Systems’, Organizational Dynamics, 13(1): 36-52.
Mills, A. (1998) ‘Contextual Influences on Human Resource Management in the Czech Republic’, Personnel Review, 27(3): 177-99.
Monks, K. (1992) ‘Models of Personnel Management: A Means of Understanding the Diversity of Personnel Practices’, Human Resource Management Journal, 3(2): 29-41.
Mrak, M., Rojec, M. and Silva-Jauregui, C. (2004) Slovenia: From Yugoslavia to the European Union. Washington: The World Bank.
Mramor, D. and Valentinčič, A. (2001) ‘When Maximizing Shareholders’ Wealth Is Not the Only Choice’, Eastern European Economics, 39(6): 64-93.
Paauwe, J. and Boselie, P. (2003) ‘Challenging ‘Strategic HRM’ and the Relevance of the Institutional Setting’, Human Resource Management Journal, 13(3): 56-70.
Paauwe, J. and Richardson, R. (1997) ‘Introduction to the Special Issue on HRM and Performance’, The International Journal of Human Resource Management, 8(3): 257-62.
Paauwe, J. (1996) ‘Key Issues in Strategic Human Resource Management: Lessons from the Netherlands’, Human Resource Management Journal, 6(3): 76-93.
Pearce, J.L. (1991) ‘From Socialism to Capitalism: The Effects of Hungarian Human Resources Practices’, Academy of Management Executive, 5(4): 75-88.
Pfeffer, J. (1994) Competitive Advantage through People. Boston, MA: Harvard Business School Press.
Pfeffer, J. (1998) The Human Equation: Building Profits by Putting People First. Boston, MA: Harvard Business School Press.
Prasnikar, J. and Svejnar, J. (1988) ‘Enterprise Behaviour in Yugoslavia’, Advances in the Economic Analysis of Participatory and Labor-Managed Firms, 3: 237-311.
Prašnikar, J. (1999) Poprivatizacijsko obnašanje slovenskih podjetij. Ljubljana: Gospodarski vestnik.
Prašnikar, J., Domadenik, P., and Svejnar, J. (2000) ‘Enterprise in Post-Privatisation Period – Firm Level Evidence from Slovenia’, East European Economics, 38(5): 60-92.
Prašnikar, J., Svejnar, J., Miheljak, D. and Prašnikar, V. (1994) ‘A Test of Enterprise Behavior under Yugoslav Labor-Management’, Review of Economics and Statistics, 4: 728-41.
Prokopenko, J. (1994) ‘The Transition to a Market Economy and Its Implications for HRM in Eastern Europe’. In Kirkbride, P.S. (ed.) Human Resource Management in Europe, Perspectives for the 1990s. New York: Routledge.
Puffer, S.M. (1993) ‘Three Factors Affecting Reward Allocations in the Former USSR’, Research in Personnel and Human Resources Management, 3: 279-98.
Purcell, J. (1994) ‘Personnel Earns a Place on the Board’, Personnel Management, 26(2): 26-30.
Purcell, J. (1999) ‘Best Practice and Best Fit: Chimera or Cul-de-sac?’, Human Resource Management Journal, 9(3): 26-41.
Richard, O.C. and Brown Johnson, N. (2001) ‘Strategic Human Resource Management Effectiveness and Firm Performance’, The International Journal of Human Resource Management, 12(2): 299-310.
Rouse, P. and Putterill, M. (2003) ‘An Integral Framework for Performance Measurement’, Management Decision, 41(8): 791-805.
Russ, G.S., Galang, M.C. and Ferris, G.R. (1998) ‘Power and Influence of the Human Resources Function through Boundary Spanning and Information Management’, Human Resource Management Review, 8(2): 125-48.
Schuler, R.S. and Jackson, S.E. (1987) ‘Linking Competitive Strategies with Human Resource Management Practices’, Academy of Management Executive, 1(3): 207-19.
Shekshnia, S. (1998) ‘Western Multinationals’ Human Resource Practices in Russia’, European Management Journal, 16(4): 460-5.
Soulsby, A. and Clark, E. (1998) ‘Controlling Personnel: Management and Motive in the Transformation of the Czech Enterprise’, The International Journal of Human Resource Management, 9(1): 79-98.
Sparrow, P.R. and Hiltrop, J. (1997) ‘Redefining the Field of European Human Resource Management: A Battle between National Mindsets and Forces of Business Transition’, Human Resource Management, 36(2): 201-19.
Please join StudyMode to read the full document