The relationships among participatory management practices for improving firm profitability: Evidence from the South Korean manufacturing industry

Abstract

Following an internal fit perspective, this research aims to explore diverse patterns of relationships among human resource (HR) practices in relation to financial performance of manufacturing organizations in South Korea. We specifically focus on participatory management practices prevalent in manufacturing organizations, and drawing on ownership theories, we then classify them into involvement-oriented and equity-oriented practices. By analyzing a multi-source data-set of 333 South Korean large manufacturing organizations, it is substantiated that involvement-oriented practices not only have additive associations with one another, but also positively interact with equity-oriented practices in relation to the organizations’ return on equity. Our research helps to elucidate how HR practices interact to realize their performance-improving impacts. Compared to existing evidence in the Western context, our findings also call attention to contextual differences in understanding the effectiveness of HR practices in an international context.

Keywords:

• Employee involvement
• internal fit
• manufacturing organizations
• participation
• return on equity
• strategic human resource management

Notes

1. See http://www.economywatch.com/world_economy/south-korea/structure-of-economy.html

2. Although the relatively low percentage of variance raises concerns regarding the uni-dimensionality of involvement-oriented practices, we found positive significant correlations among the five practices at p < .001, as well as their positive significant correlations with ROE. These additional results support the validity of the measures used for involvement-oriented practices.

3. For more information, please go to http://www.worldvaluessurvey.org/WVSContents.jsp and see the section of findings and insights.