Insider econometrics meets people analytics and strategic human resource management

Abstract

Researchers in the field of HRM and Strategic HRM have for several decades engaged in research endeavours to identify the link between HR investments and firm performance. Despite this, the field still has some way to go to definitively demonstrate this causal relationship; partly due to the cross-sectional nature of much of this research. In the current paper, we give a brief overview of the SHRM field and the benefits that the new subfield of People Analytics (PA) might bring to the area. We also conduct a brief survey of research in Insider Econometrics, an approach used in Personnel Economics to produce empirical estimates of the value of HR practices, to highlight longitudinal intra-firm research in economics that could provide insights to research exploring the HR investment-performance link (important in both SHRM and PA fields). We discuss the value of combining the business impact perspective of People Analytics that has a unique ‘inside’ (intra-firm) position, with the longitudinal intra-firm analysis approaches utilized in Insider Econometrics. We suggest that People Analytics researchers, who are able to draw on the theoretical developments in HRM field, would benefit from exploring existing research insights and methodological techniques used within the field of Insider Econometrics.

Keywords:

• Human resource management
• strategic human resource management
• insider econometrics
• personnel economics
• people analytics
• HR analytics
• intrafirm analysis
• longitudinal methods

Disclosure statement

We have no conflicts of interest to report.

Data availability statement

Data sharing is not applicable to this article as no new data were created or analyzed in this study.

Notes

1 JEL-codes are widely used for classifying and categorizing economic research. M5 is the JEL-code for Personnel Economics and it has seven subdivisions: M50: General; M51: Firm Employment Decisions, Promotions; M52: Compensation and Compensation Methods and Their Effects; M53: Training; M54: Labor Management; M55: Labor Contracting Devices; and M59: Other.

2 IDEAS is one of the largest bibliographic databases in the world dedicated to Economics. It is based on RePEc (Research Papers in Economics) and indexes over 2,800,000 items of research (https://ideas.repec.org/). There are many databases that use the information stored in RePEc, one of these, EconPapers (https://econpapers.repec.org/), has approximately the same coverage as IDEAS, however we chose to use IDEAS as it is the only service that provides access to all research items in RePEc.

3 Although not presented in this paper we also extended Marler and Boudreau’s (2017) review to cover 2017 and 2018, and even though we, in line with Tursunbayeva et al. (2018), extended Marler and Boudreau's keyword searches to include Employee Analytics and Human Capital Analytics, we only managed to find one paper that could be considered to be an applied paper.

4 The papers were downloaded from February to April, 2019. At that time 13 had been published or accepted for publication and 12 were available online as working papers. As of October 2020, 15 of the articles have been published or accepted for publication. Several of the papers have been published in management or interdisciplinary journals, but Frick et al. (2018) is the only one that has been published in an HRM-designated journal.

5 The American Economic Review is one of the most prestigious journals in economics, and some of the most influential papers in Personnel Economics and Insider Econometrics have been published there.

6 The article by Simón & Ferreiro (2018) is not presented as an empirical research paper but rather as a ‘case study of scholar–practitioner collaboration’ and the authors frame their analyses of store productivity in a series of discussions of the benefits and challenges of such collaborations. It is nevertheless the only search result that could be considered to constitute a longitudinal quantitative intrafirm study, when applying Marler & Boudreau’s search protocol for the years 2017–2018.

7 van der Laken et al. (2018a) appears as a chapter in a PhD thesis with the title Data-driven Human Resource Management: The rise of people analytics and its application to expatriate management. However, the chapter itself makes no reference to HR/People Analytics and would as such not appear in a narrow keyword search had it been published as an independent paper.

8 There are for instance also recent examples from both economics and management of quantitative ‘people analytics type’ studies that explore the effects of employee wellness programs on health and productivity in both public and private services (e.g. Gubler et al., 2018; Jones et al., 2019). In economics these types of studies typically fall under the I category in the JEL classification system (I1 = Health, I2 = Education and Research Institutions, I3 = Welfare, Well-being, and Poverty).