HRM and performance—The role of talent management as a transmission mechanism in an emerging market context

• Author: Gaye Karacay,Mehmet Demirbag,Ekrem Tatoglu,Alison J. Glaister
• DOI: http://doi.org/10.1111/1748-8583.12170
• Date: 01 January 2018
• Published date: 01 January 2018

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ORIGINAL ARTICLE

HRM and performance—The role of talent

management as a transmission mechanism in an

emerging market context

Alison J. Glaister

1

|Gaye Karacay

2

|Mehmet Demirbag

3

|

Ekrem Tatoglu

4

1

The York Management School, University of

York, UK

2

Faculty of Management, Istanbul Technical

University, Turkey

3

Essex Business School, University of Essex,

UK

4

School of Business, Ibn Haldun University,

Turkey

Correspondence

Professor Mehmet Demirbag, Chair in

International Business, Deputy Dean and

Professor of International Business, Essex

Business School, University of Essex, Southend

Campus, Elmer Approach, Southend‐on‐Sea

SS1 1LW, UK.

Email: mdemirc@essex.ac.uk

Abstract

This paper investigates the link between HRM practices, talent

management (TM), and firm performance and examines the role of

HRM/business strategy alignment in an emerging market context.

Through survey evidence gathered from 198 respondent firms, this

study shows that TM, when focused on a series of practices aimed

at developing workforce networks and social capital, is a key

transmission mechanism mediating the relationship between HRM

and firm performance. HRM strategy and business strategy

alignment increases these performance impacts but is not an

essential component in the HRM‐TM‐performance link.

KEYWORDS

dynamic capabilities, emerging markets,firm performance, talent

management

1|INTRODUCTION

The employment context is changing as organisations face demographic and economic pressures, the increasing mobil-

ity of human capital through globalisation, and a greater shift towards knowledge‐based economies (Beechler &

Woodward, 2009; Guthridge, Komm, & Lawson, 2008). Organisational success now depends on sustaining business

through people (Boudreau & Ramstad, 2005), and as globalisation intensifies, so too does the need for talent. A

premium is placed on the process of talent management (TM) as organisations position themselves as employers of

choice, developing strong employer brands and a defined value proposition through their TM systems (Martin & Cerdin,

2014; Schuler, 2015; Sparrow & Makram,2015). TM involves sourcing the right talent, developing a flexible talent base

and meeting the demands of different psychological contracts, marshalling effective strategy, and managing risk

(Sparrow, Hird, & Balain, 2011; Sparrow, Scullion, & Tarique, 2014). The issues of managing talent are universal but

are moreacute in emerging marketeconomies (Doh, Smith,Stumpf, & Tymon,2014; Pelster, Schwartz,Rizzo, Valenzuela,

& Van DerVyer, 2013) where talentshortages highlighta pressingneed for organisationsto adopt strategicapproaches to

TM. Yet manyorganisations still considertalent a short‐term concern(Guthridge et al.,2008), and scholarly researchsug-

gests a disconnectbetweenTM and organisational strategy(Al Ariss, Cascio, & Paauwe,2014; Chadee & Raman, 2012).

Received: 14 June 2016 Revised: 3 July 2017 Accepted: 6 August 2017

DOI: 10.1111/1748-8583.12170

148 © 2017 John Wiley & Sons Ltd Hum Resour Manag J. 2018;28:148–166.wileyonlinelibrary.com/journal/hrmj

Scholarly interest inTM is increasing (Meyers & van Woerkom, 2014; Nijs, Gallardo‐Gallardo, Dries, & Sels, 2014;

Tatoglu, Glaister, & Demirbag, 2016). Despite this, only one third of scholarly output is empirical in nature

(Thunnissen, Boselie, & Fruytier, 2013) and research is lagging behind practice (Dries, 2013). More needs to be done

to understand the alignment between human resource management (HRM), TM, and firm performance. This phenom-

enon is best studied in a context whereTM is likely to have an impact, specifically in an emerging market, in which the

linkages, if they exist, are more likely to be detected because of the heightened relevance of TM fuelled by growing

industrial capacity, consumer markets, and earning potential (Doh et al., 2014; Harvey & Groutsis, 2015).

This paper examines the link between HRM practices, TM, and firm performance and the role of HRM/business

strategy alignment. The contribution of this paper is threefold: First, it contributes to an understanding of how TM

operates as a transmission mechanism by combining the resource‐based view (RBV) with dynamic capabilities.

Research examining the relationship between HRM, TM, and firm performance has been largely absent in the litera-

ture. Second, to the best of our knowledge, it is the first to test the centrality of the HRM function to the HRM‐TM‐

performance link. Third, it identifies theTM practices that impact performance in an emerging market context.

The paper is structured as follows: The relationship between HRM and firm performance is examined using RBV

to explain how resource characteristics create advantage. Dynamic capabilities are introduced to explain how TM

operates as a transmission mechanism, mediating the HRM‐performance link. The role of the HRM function in

HRM‐business strategy alignment is examined alongside its struggle for legitimacy within the organisation. Each of

these areas frames a set of hypotheses that are presented throughout. An examination of the research methods is

then followed by a discussion and conclusion. A series of implications for practitioners, study limitations, and possible

avenues for further research are presented.

2|HRM AND TM AS A TRANSMISSION MECHANISM

HRM focuses on each of an organisation's employees, whereas TM focuses on an exclusive set of pools, people,

positions, or practices that add the most value to the firm (Sparrow et al., 2014; Tarique & Schuler, 2014). TM

considers the contextual value and differential contributions of key actors within the organisation (De Vos & Dries,

2013; Glaister, Liu, Sahadev, & Gomes, 2014; Linden & Teece, 2014) and develops “an advanced”and “sophisticated”

set of supporting HRM policies and practices (Sparrow et al., 2014, p. 51) to sustain maximum value. As such, TM is a

key transmission mechanism (Chowhan, 2016) through which HRM practices interact to affect organisational

performance.

The high‐performance work system (HPWS) consists of various bundles of HRM practices, and much of the

research in this area suggests that these systems contribute positively to organisational performance (Boselie, Dietz,

& Boon, 2005). There is little agreement on what constitutes a definable bundle, but these can be disaggregated into

skill enhancing (training), motivation enhancing (rewards) and opportunity‐enhancing practices (work design) (Chuang,

Jackson, & Jiang, 2016; Demirbag, Tatoglu, & Wilkinson, 2016; Jiang, Lepak, Hu, & Baer, 2012; Lepak, Liao, Chung, &

Harden, 2006). This study uses the HRM practices employed in Tatoglu et al.'s (2016) study of an emerging market

context and includes training and development, recruitment and selection, performance appraisal, and workforce

planning. Such bundles do not work in isolation but are part of a synergistic system combining internally while flexing

to the external environment (Foss, Pedersen, Fosgaard, & Stea, 2015). The relationship between HRM and perfor-

mance is explained through RBV (Wright, Gardner, & Moynihan, 2003; Wright, Gardner, Moynihan, & Allen, 2005),

where organisations seek to maximise their internal resources through developing valuable, rare, inimitable, and

nonsubstitutable resources that are both socially complex and causally ambiguous (Barney, 1991; Barney & Wright,

1998). These characteristics depend upon management systems that are capable of exploiting value, but the HRM

practices themselves are not the “direct”source of competitive advantage (Fu et al., 2017, p. 330). Causality is prob-

lematic, and the mechanisms through which HRM impacts performance are varied (Wright et al., 2005; Keller &

Cappelli, 2014). The relationship between HRM and performance operates through a range of motivation‐related

GLAISTER ET AL.149

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