Corporate Governance, Human Capital Resources, and Firm Performance: Exploring the Missing Links

Abstract

This study explores the associations between human capital resources, firm performance, and corporate governance mechanisms. Based on the survey results of the ‘‘50 most attractive
employers’’ conducted by Universum Global 2010, human resource, performance, and governance data was collected for the period from 2007 to 2011. Drawing on the strategic human capital and resource management, international governance, and organizational literature, this study
examines the extent to which corporate governance mechanisms moderate the relationships between firm performance and human capital resources and posits that human resource performance is positively associated with corporate governance mechanisms that support and enhance strategic human resource management policies. Panel regression analyses
are conducted to test the study’s hypotheses. The results show that human capital resources are positively related to firm performance, and that some corporate governance mechanisms may negatively affect performance when interacted with human capital variables. Furthermore, human resource performance is significantly related to some governance mechanisms, with interaction effects between human capital and other organizational attributes showing differential
impacts. Overall, the results support a contingency-based view of strategic human resource management in the context of large and attractive global employers and highlight the importance of governance design in supporting investments and deploying human resources and capabilities at the firm and industry levels and across national boundaries.

Keywords: Human Capital Resources, Corporate Governance, Human Resource Performance, Most Attractive Employer Survey, International Governance

JEL Classification: G34