Human resource practices, employee competencies and firm performance: a 2-1-2 multilevel mediational analysis

Abstract

Purpose

This study aims to understand the role of employee competencies in terms of the relationship between Human Resource Practices (HRPs) and firm performance.

Design/methodology/approach

A sample of 60 HR managers and 546 employees from large-scale food processing firms were considered for the study. The study presents a 2-1-2 multilevel mediational analysis in which HRPs and firm performance are measured at the firm level (Level-2) and employee competencies are measured at employee level (Level-1).

Findings

Positive relationship was found between HRPs and firm performance, which was partially mediated by employee competencies.

Practical implications

The study highlights the importance of employee-related factors by focusing on the wider dimensions of human capital (e.g. academic qualification, job experience) in HRPs–performance relationship.

Originality/value

The study undertakes a 2-1-2 multilevel mediational analysis, which is rarely applied in HRM studies; however, this interaction between macro- and microlevel effects will create a better understanding of organization studies from an integrated and multilevel context.

Citation

Kaur, S. and Kaur, G. (2022), "Human resource practices, employee competencies and firm performance: a 2-1-2 multilevel mediational analysis", Personnel Review, Vol. 51 No. 3, pp. 1100-1119. https://doi.org/10.1108/PR-08-2020-0609