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

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”, we collected human resource, governance and performance data for the time period from 2007 to 2011. Drawing on strategic human capital and resource management, international governance, and organizational literatures, we test the hypotheses according to which corporate governance mechanisms moderate the relationships between firm performance and human capital resources (Hypothesis 1); and posit that human resource performance is positively associated with corporate governance mechanisms that support and enhance human capital resources (Hypothesis 2). We use panel regression analysis to test the study’s hypotheses. Results show that human capital resources are positively related to firm performance and that some corporate governance mechanisms negatively impact firm performance when interacted with human capital variables. Furthermore, human resource performance is positively and significantly related to some governance mechanisms with the interaction effects between human capital and governance variables showing differential impacts. Overall, the results highlight the importance of governance design in supporting investments and deployment of strategic human resources at the firm and industry levels and across national boundaries.