What are the drivers of high performing organizations? In HRM research and practice, the relationship between HRM and organizational performance dominates the research of last decade. Employees and their relationship with the organization take central stage in this perspective since HRM aims to contribute to organizational performance while optimizing the relationship between employees and organization. However, HRM research has failed to empirically establish this relationship. This study attempts address this research gap by empirically investigating the relevance of HRM for the employee organization relationship. In doing so, this study ‘bridges’ two streams of HRM research, organizational level research on HRM and performance and individual level theorizing on employee work perceptions and behavioral performance. We focus our attention on the concept of the psychological contract. The psychological contract connects organizational level and individual level perspectives because of its focus on the exchange relationship between organization and individual. Based on a sample of 49 organizations with 2099 individual respondents we have investigated, using a multi-level analytical technique, the signalling value of HRM on degree of psychological contract violation of employees. Our findings indicate that there is a significant relationship between HRM, organizational design factors and the degree of perceived psychological contract violation. Our findings provide us with one of the first empirical indications on how HRM leads to effectiveness.

Employment relationship, Human Resource Management, Multi-level analysis, Psychological contract, Signalling
Firm Objectives, Organization, and Behavior (jel L2), Business Administration and Business Economics; Marketing; Accounting (jel M), Business Administration: General (jel M10), Personnel Management (jel M12)
J. Paauwe (Jaap)
Erasmus University Rotterdam , Erasmus Research Institute of Management
Hartog, D.N. den, Koene, B.A.S., Paauwe, J., Peccei, R.E., Schalk, R.D.J.
ERIM Ph.D. Series Research in Management
Erasmus Research Institute of Management

Sonnenberg, M. (2006, October 12). The Signalling Effect of HRM on Psychological Contracts of Employees: A Multi-Level Perspective (No. EPS-2006-086-ORG). ERIM Ph.D. Series Research in Management. Erasmus Research Institute of Management. Retrieved from http://hdl.handle.net/1765/7995