Promise Kept or Broken? The Effects of Continued (and Discontinued) Investments in HRM Practices

This study examines the effects of continued (and discontinued) investments of human resource management (HRM) practices on employee quit rates. Drawing on the theoretical foundations of social exchange theory, employee-organization relationships, and psychological contracts, the study suggests that the effects of HRM inducements and investments on employee quit rates are strengthened when such practices are continually invested over time, whereas the effects of HRM expectation-enhancing practices on employee quit rates are attenuated when continually invested over time. In addition, the authors investigate the three-way interaction effects among continued investments of HRM inducements and investments, and HRM expectation- enhancing practices to suggest a boundary condition on the effects of different employee- organization relationship type. We analyze 151 firms in South Korea with a longitudinal data measured in five time points (i.e., 2004, 2006, 2008, 2010, and 2012) by panel Tobit analysis. The results support all hypotheses except for the continued effects of HRM expectation-enhancing practices over time. Overall, the paper contributes to the social exchange theory, employee-organization relationship framework, and psychological contract literature by exploring the effects of HRM practices with a longitudinal perspective.