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Background:
Systematic Review

The Impact of Human Resource Management on Financial Performance: A Systematic Review in Cooperative Enterprises

by
Birhanu Daba Chali
1,* and
Vilmos Lakatos
2
1
Faculty of Economics and Business, Doctoral School of Management and Business, University of Debrecen, 4032 Debrecen, Hungary
2
Faculty of Economics and Business, Institute of Accounting and Finance, University of Debrecen, 4032 Debrecen, Hungary
*
Author to whom correspondence should be addressed.
J. Risk Financial Manag. 2024, 17(10), 439; https://doi.org/10.3390/jrfm17100439
Submission received: 9 August 2024 / Revised: 16 September 2024 / Accepted: 26 September 2024 / Published: 30 September 2024
(This article belongs to the Section Sustainability and Finance)
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Abstract

:
This paper presents a systematic review that examines the influence of human resource management (HRM) on financial performance in cooperative enterprises, utilizing the PRISMA approach. To gather relevant resources, we formulated a search strategy using predefined keywords such as “HRM”, “Financial Performance”, and “Cooperative”. After applying the inclusion criteria (full articles, online accessibility, English language, and relevance to the topic), 26 articles were selected for review. The findings of this analysis reveal a positive relationship between HRM practices and financial performance, with HRM driving both efficiency and profitability. High-performing HRM functions enhance employee productivity while ensuring personnel welfare and improving the organizational climate. Modern HRM practices are crucial in increasing employee engagement, fostering innovative cultures, and improving operational efficiency. These practices directly affect financial performance by linking employee engagement with product quality, profitability, and retention. Based on the studies reviewed, this paper contributes significantly to the existing literature and offers key conclusions that can be drawn from the findings.

1. Introduction

In the contemporary business landscape, the strategic management of human resources has emerged as a critical determinant of firm success and sustainability. Human resource management (HRM) is a stream of managerial practices comprising activities such as hiring, selection, training and development, performance management, compensation, and engagement; these practices also play a major role in shaping workers’ skill level and motivation within organizations (Singh and Kassa 2016). We can treat the inclusion of the latest HRM practices in cooperative enterprises as a strategic opportunity to ensure coordinated investment in human capital, aiming to achieve organizational goals and performance (Sacchetti et al. 2016). Modern HRM practices in cooperatives can enhance worker engagement, foster an innovative culture, and boost operational effectiveness, which are crucial for success in today’s highly dynamic business environment (Martini et al. 2017).
The member ownership model, a unique corporate governance model based on democratic decision making and community development, distinguishes cooperative enterprises from ordinary businesses. Despite being unique to the cooperative identity, these namesake concepts also contribute to specific difficulties in the organization and strategy formulation domains. We can divide conventional member-based HRM practices into several groups, such as appraising employee participation, monitoring activities, and adhering strictly to cooperative ideals (Aryal and Singh 2023). Though cooperative societies venture into liberal market systems and technological evolution, the need for HRM practice reform becomes unarguably necessary because this will add to their competitiveness, which in turn will rebuild their resilient systems (Shakir et al. 2020).
In today’s highly competitive business environment, cooperatives are likely to face significant pressure to produce high-quality results, ensuring the continuation of growth and competitiveness (Shakir et al. 2020). Nowadays, HRM policies serve as the main pillars of many companies, shaping the future of industry outcomes. Recently, Aryal and Singh (2023) recognized the critical role of HRM in an organization’s success. Various studies conducted by Chinyamurindi et al. (2021), Ramos-Torres (2017), and Priyadharshini et al. (2015) have proven the crucial importance of HRM in the success of organizations.
Some researchers have found that high-performance work practices can have a significant impact on staff turnover, productivity, and corporate financial performance (Meier et al. 2021; Ramos-Torres 2017). Other scholars also noted the reverse causal effect of financial performance on HRM practices (Byarugaba et al. 2022; Khan et al. 2020). Additionally, Mulolli and Boskovska (2020) have highlighted the significant role of HRM in enhancing financial efficiency and profit. The organizations now zeroed in on the strategic aspect of human managerial resources with increasing recognition (Meier et al. 2021). Thus, an understanding of the effect of HRM practices on financial performance becomes critical. These findings collectively underscore the importance of effective HRM in driving financial success.
Despite the importance of HRM practices in enhancing organizational performance, there is limited systematic evidence on how these practices specifically influence financial outcomes in cooperative enterprises, which operate under unique governance and organizational structures. The paper aims to bridge the gap in the current literature by presenting evidence of the relationship between HRM practices and financial performance through a systematic review using the PRISMA approach. In addition to stressing the value of strategic HRM for cooperative businesses, the review also shows how a successful HRM can promote innovative cultures, increase operational efficiency, and increase employee involvement; all of these are key factors in organizational success. The purpose of this paper is to offer cooperatives insights that will help them enhance their HRM procedures to boost their overall financial and operational performance.
Hence, this systematic review, conducted in accordance with the PRISMA protocol, presents a clear picture by evaluating existing studies; the reviewer understands the context of HRM and performance in cooperatives. This review also aims to accumulate authentic generalizations on the relationship between HRM and financial performance in cooperatives, which can be practically useful for business practitioners and policymakers. This review aims to systematically analyze the literature in the domain of HRM and its influence on business performance in cooperative enterprises.

Theoretical Background

It has been widely accepted that the role of human resource management (HRM) in a firm enhances the firm’s financial performance. Based on several theories, this literature review seeks to examine the important theoretical perspectives of HRM and its relationship to financial performance.
The resource-based theory view concentrates upon the firm’s robust and physician resources as the pillars that promote the successful performance of the firm. According to this view, HRM practices, like any other unique, valuable, and hard-to-imitate resources, also contribute to the long-term competitive advantage of an organization and aids its ability to achieve better financial results (Gerhart and Feng 2021). Additionally, Ahmed et al. (2018) argued that, when organizations have such high-quality HRM, they can attract, hire, train, and retain the right talent, resulting in increased productivity and innovation and therefore better financial results.
Human capital theory emphasizes the importance of rigorous efforts toward human capital, specifically education, training, and skills, as a means of generating economic benefits for organizations. From this perspective, HRM techniques are tools for improving the human potential of employees, which in turn enhances their efficiency and contributions to the organization (Rompho 2017). This view also holds that those businesses that commit resources to training, education, and other HRM practices are more productive as human resources acquire and offer more knowledge and skills for the benefit of business profits.
In social exchange theory, employees and other parties related to organizations enter the relationship to some degree with the notion of reciprocity, so long as the exchange is primarily about social exchange. However, in the context of HRM practices, they explain that, when organizations treat their employees well, provide growth opportunities, and pay them decent salaries, employees will act differently, with more positivity, as opposed to making hollow efforts (Ahmed et al. 2018). Organizations that emphasize positive social exchanges do so, and they even improve employee performance, employee satisfaction, and eventually financial performance (Mohammad et al. 2021).
In the context of organizational behavior and practices, the Institutional Theory highlights the influence that societal norms, values, and institutions have on them (Ming-Chu 2017). Within the context of HRM practices, there are also powerful institutional forces that pressure organizations from the outside, including regulators, industry groups, and broad societal expectations, which affect the organizations’ HRM practices. Organizations can adopt HRM practices not only to enhance their financial performance but also to comply with institutional pressures. Ming-Chu (2017) found that institutional influences, which account for the variance in other organizational processes, may explain why there is no strong relationship between some HRM practices and financial performance.
The contingency theory suggests that achieving organizational effectiveness requires a thorough assessment of both the internal organizational structure and the external environment. Similarly, when it comes to HRM practices, this perspective asserts that the connection between these practices and financial outcomes can only materialize when other organizations and environmental factors, such as the organization’s size, industry structure, and technology, exist (April Chang and Huang 2005). To maximize financial outcomes, companies are required to tailor their HRM policies and practices to the needs of the organization and industry.
In conclusion, we can analyze the interrelations between HRM practices and financial performance from a variety of theoretical perspectives. Although scholars adopting one or another theoretical perspective may focus on some particulars of this link, in general, all of them stress the importance of strategic HRM practices for organizational and financial performance. Drawing on the theoretical frameworks advanced above, scholars can understand the rationale behind any HRM practices and strategies quite easily and quickly, to increase organizational performance in the modern socioeconomic environment, characterized by volatile business conditions.

2. Methods

To address a research question, a systematic review compiles all pertinent data that meet the predetermined eligibility requirements. The need for a methodical and rigorous research approach drives the use of systematic reviews, especially the PRISMA approach (Purnomo et al. 2022). Based on a methodical, transparent, and explicit step-by-step iterative process, this approach can assist researchers in synthesizing an existing body of the literature (Bakator et al. 2019). Furthermore, besides the PRISMA methodology, additional techniques such as forward and backward snowballing were used to guarantee miscellaneous writing. Backward snowballing has the component of studying references from the papers that have been included to identify the studies that are relevant in a chronological manner, having been published before the included studies (Wohlin 2014). These approaches assist in locating previously overlooked older studies, as well as the more recent literature, that may not have been recovered during the initial database search (Wohlin 2014). This improves the robustness of a review, and in this paper, the relationship between HRM practices and financial performance in cooperatives has accordingly been explored more comprehensively.
The PRISMA model is becoming more and more popular in fields other than evidence-based medicine. Despite its diffusion in management studies, systematic reviews of finance literature have already used the model (Shakir et al. 2020; Alkhowaiter 2020; Khan et al. 2022). The four steps in our PRISMA flow diagram serve as its foundation.
During the identification stage, investigators pinpoint the research question and look for pertinent papers. There should be distinct inclusion and exclusion criteria, and the search procedure should be methodical and thorough. In the screening stage, researchers evaluate the studies they found in the first phase based on their applicability to the research question and the inclusion and exclusion criteria. Typically, this stage involves screening the studies’ titles and abstracts, followed by a full-text review for those that meet the inclusion criteria. Researchers evaluate the eligibility of studies that have passed the screening stage. This assessment also evaluates the quality of the studies and their relevance to the research question. The systematic review includes studies that meet the eligibility criteria. We extract and analyze the data, synthesize the findings, and report them.
In the first stage, we devised a strategy to evaluate pertinent materials by defining precise inclusion and exclusion criteria. We created a search expression using predefined keywords such as “HRM” AND “Financial Performance” OR “Cooperative” to find the necessary resources. We developed a set of inclusion criteria that encompassed elements such as full articles, online accessibility, English writing, and relevance to the study. Next, we outlined the exclusion criteria in Table 1, which includes books, conference reports, editorials, articles written in languages other than English, and grey literature (reports from the non-academic industry, government documents, or materials that do not meet the inclusion criteria). By the PRISMA checklist, we considered the pertinent factors listed in Table 1.
In the second stage, the study proceeded with a systematic literature review following the PRISMA protocol. We collected materials from the chosen search databases using the search expressions derived from the selected keywords. This analysis is limited to pertinent empirical literature published between 2006 and June 2024. This timeframe limitation ensures that the study analyzes the most complete and current research available at the time of the analysis, despite its aim to capture the most recent research on organizational financial performance. We removed duplicates, non-English articles, and non-academic documents from the 72 documents the search yielded. This process yielded a final sample size of 26. We carefully examined the abstracts of these articles to identify those that contained information relevant to the study’s scope. The literature screening and selection process adhered to the PRISMA model, as depicted in Table 1 and Figure 1.

3. Result

This section presents the findings of the frequency analysis and the categorization of these papers into distinct groups according to the previously discussed structural dimensions.
The distribution of the reviewed articles over time includes 26 papers published between 2006 and 2024. Since then, there have been more papers about the impact of HRM on financial performance (see Figure 2 for paper distribution per year).
The distribution of the reviewed articles varies by country. Figure 3 explains countries that have published two or more articles about the impact of HRM on a company’s performance. The outcomes and results indicate that mostly the research institutes working on the performance of SEs are based in India (4), Malaysia (4), the United States (3), Australia (2), Canada (2), China (2), Oman (2), Spain (2), and the United Kingdom (2) (see Figure 3).
We consulted reputable journals as primary sources for this evaluation of articles on HRM. We searched for articles on the Google Scholar and Scopus websites. We also considered articles published as meta-analyses or systematic review papers. We also disregarded the journal issue, volume, and number, as they did not influence the discovered results. We excluded articles from unreputable sources and eliminated duplicates in this manner. We used the terms “financial performance”, “human resource management”, and “cooperative” in the search process. We obtained data for this systematic review from the individual included articles. The information in Table 2 shows the authors’ names, methodologies, and main findings for the individual studies.

4. Discussion

Studies have shown mixed results when it comes to the empirical examination of how human resource management (HRM) practices affect financial performance levels at firms due to various factors, including complexity and context dependency around this relationship. Given these findings, the present study seeks to synthesize important recent research works that provide insights into evidence supporting different parts of this relationship.
The success of any cooperative depends on their bringing individuals on board who share their visions and aspirations. HRM ensures this by aligning recruitment with those priorities, looking out for candidates with not just relevant skills but also a commitment to the cooperative’s values (Shakir et al. 2020). Through the selection process, HR contributes to building one workforce that is united behind common causes, aiming to promote a collectively beneficial vision within co-operatives.
It is important to invest in training and development programs that enhance the competence and flexibility of workers. HRM can design training schemes that will enable employees to gain the skills needed to navigate through the intricacies of cooperative management and provide services (Voo et al. 2018). HRM fosters a learning atmosphere that generates new ideas, enhancing companies’ responsiveness to members’ changing needs and competitiveness (Shakir et al. 2020).
According to Bakator et al.’s (2019) study, there exists a medium–strong but statistically significant relationship between training efficiency on the one hand and financial performance indicators such as ROI or market capitalization on the other hand. Furthermore, Martini et al. (2017) discovered that companies that invest in employee development programs have higher levels of productivity, leading to increased innovation and, consequently, improved market share profitability.
The essential elements of a performance management system that ensure the full commitment of staff and link their objectives to organizational goals are the right basis for the maximum realization of staff contribution. HRM sets standard performance metrics that match both financial and non-financial elements as a reflection of a worthwhile performance-oriented cooperative system, giving the employees a clear sense of expectations and clear feedback (Sacchetti et al. 2016). HR managers can reward and acknowledge the team’s accomplishments, fostering an organizational culture of excellence and accountability that will ultimately enhance financial performance.
In a best-case scenario, an examination can show how performance management systems affect the financial performance of companies, but it may not be consistent with other cases. Research on the link between financial results and performance appraisal systems has come up with different conclusions. For instance, Aryal and Singh (2023) have highlighted the challenge of measuring performance management against financial outcomes due to various confounders, including personal judgment in awarding performance marks.
To attract and retain talent, cooperatives must offer fair and just compensation. HRM ensures that payment rates are competitive enough by setting remuneration systems that are fairer than those used by rivals at higher levels within an organization. Furthermore, cooperatives can motivate their employees by providing good salaries, incentives, and benefits packages, while still ensuring financial sustainability through proper utilization of cooperative resources (Anwar and Abdullah 2021). Long-term research consistently demonstrates that aligning strategic compensation and benefits practices with the organization’s profitability leads to financial success. According to Wright et al.’s (2004) research on topical issues, cooperatives that receive high incentive-based compensation will benefit from increased worker productivity and profitability. For instance, Anwar and Abdullah (2021), Voo et al. (2018), and Martini et al. (2017) were able to prove that companies with incentive payment processes like profit-sharing and gain-sharing programs have better financial results than companies using a traditional form of compensation.
Positive employee relations are essential in creating a supportive work environment that encourages collaboration and engagement. HRM is a method of human management that encourages open communication, information transparency, and trust between management and employees, who feel a duty to deliver their ideas and comments (Voo et al. 2018). By addressing employees’ concerns and promoting a cooperative’s culture of respect and inclusivity, HRM enhances the social capital of the cooperative, thereby boosting employee morale and productivity (Aryal and Singh 2023).
Democratic HR governance involves participatory decision-making processes and putting in place transparency, accountability, and stakeholder engagement that enhance financial performance. It increases employee participation and productivity, enhances stakeholder confidence, and improves risk management (Aryal and Singh 2023). At the same time, democratic HR governance slows down decision-making efficiency and requires huge investment before implementation. Factors such as industry type, company size, and cultural context may affect the relationship between democratic governance and financial performance (Morrison 2011). To obtain the best results, cooperatives should adopt a balanced approach to this by upholding democratic principles without compromising efficiency. Ghosh and Chaudhury’s (2019) research demonstrates that democratic HR governance significantly enhances corporate finance, particularly in terms of stakeholder trust and employee involvement. However, it also poses challenges that necessitate careful management (Aryal and Singh 2023). Different moderating factors determine how effective this can be; hence, firms need to take a subtle path depending on their specific circumstances.
According to a review by Bakator et al. (2019), employee engagement has a very high correlation with a variety of financial performance indicators, such as product quality, profitability, and employee retention. Firstly, in 2004, Wright et al. found that organizations with high employee engagement levels had lower absenteeism rates and increased customer loyalty. This ultimately enhances the financial performance of a company.

5. Impact on Financial Performance

Human resource management practices can have a positive impact on a firm’s profitability if used effectively. More and more companies are discovering that human resource practices can improve an organization’s effectiveness and ultimately lead to bottom-line profits. There are many ways in which effective implementation of HRM practices can directly affect financial performance within cooperatives. Firstly, by recruiting and retaining skilled and dedicated employees, cooperatives can enhance operational efficiency, improve service delivery, and ultimately increase member satisfaction and loyalty (Anwar and Abdullah 2021). Secondly, investing in staff training programs creates room for adaptation among cooperatives, thus enabling them to innovate new ventures while at the same time diversifying income sources to respond adequately to market changes surrounding them (Voo et al. 2018). Thirdly, by aligning individual performance with a firm’s goals, HRM fosters a sense of ownership and accountability among employees, driving improvements in productivity and financial outcomes (Martini et al. 2017).
Numerous studies have explored the relationship between HRM practices and financial performance. A study by Hijazi et al. (2024) showed that effective implementation of HRM practices can directly affect financial performance. With strategic HRM investment in place, organizations can note significant improvement in important financial issues such as profit margins and ROI (Aryal and Singh 2023). According to a review by Bakator et al. (2019), employee engagement, on the other hand, has a very high correlation with a variety of financial performance indicators such as product quality, profitability, and employee retention. Firstly, in 2004, Wright et al. found that organizations with high employee engagement levels had lower absenteeism rates and increased customer loyalty. This ultimately enhances the performance of a company. Another study by Mutua (2019), which found that having a formal HR department leads to better resourcing of human capital and improved performance, confirmed these conclusions. Nguyena et al. (2020) and Chinyamurindi et al. (2021) assert that the recruitment and retention of skilled and dedicated employees can enhance operational efficiency, improve service delivery, and ultimately increase member satisfaction and loyalty. On the other hand, Mulolli and Boskovska (2020) show that investing in staff training programs creates room for adaptation among employees, thus enabling them to innovate new ventures while at the same time diversifying income sources to respond adequately to market changes surrounding them.
Thus, by aligning individual performance with the company’s goals, HRM fosters a sense of ownership and accountability among employees, driving improvements in productivity and financial outcomes. Hameed et al. (2020) presented a different perspective, suggesting that a firm’s behavior might not be the only factor accounting for the relationship between HRM and performance, thereby urging further inquiry into this area (see Figure 4).

6. Conclusions

In conclusion, HRM shapes financial performance by attracting human capital that matches their values and objectives. Therefore, investing in effective HRM strategies remains vital for survival in complex current business environments. By enhancing recruitment, training, performance management, compensation, and employee relations, the company can build a staff cohort who are not only competent but also motivated towards achieving joint goals. When employees experience a positive working environment, turnover will decrease, and satisfaction will increase. This will result in higher productivity and efficiency. This means that human resources practices do indeed have an impact on a firm’s profitability, but certain practices may have a more profound impact than others, depending on the firm’s specific strategy. Singh and Kassa (2016) identify HR as a valuable source of competitive advantage for companies. Although they do not bring in money directly, HR practices improve the overall efficiency of an organization. One can always view investing in people as a strategic long-term optimization, rather than a cost consideration (Papaioannou et al. 2024). The success or failure of a company is probably not solely dependent on whether they practice effective HRM; however, these practices are likely to play an important role (Anca-Ioana 2013). In conclusion, various factors influence the impact of HRM practices on profitability.

7. Limitations and Future Directions

We recognize the potential weaknesses of our study, such as the selection bias which is liable to occur in any systematic review. Moreover, our interest in the subject of cooperative enterprises may not allow for the transferability of the results to other companies. Future research could address the cultural or geographical aspects of HRM’s efficiency and determine which concrete HRM instruments contribute the most to financial success. Further directions would include the combination of HRM with CSR and sustainability, evaluation of factors besides financial ones, such as employee health, and the use of HRM in crises. Additionally, future studies can explore the relationship between the “Member Ownership Model,” HRM practices, and financial performance in cooperatives. Last, exploring leadership’s influence on HRM success and the reverse causality of financial performance affecting HRM practices could further refine the understanding of HRM in cooperatives.

Author Contributions

Both authors have made significant contributions to this review. B.D.C. conceptualized the study, and literature review, designed the methodology, and discussion and analysis. V.L. contributed to the literature review, provided critical revisions, and assisted with the interpretation of the results. Both authors participated in the drafting of the manuscript and reviewed and approved the final version for submission. All authors have read and agreed to the published version of the manuscript.

Funding

The APC of this study is financed by the Faculty of Economics and Business, University of Debrecen, Hungary.

Acknowledgments

The authors thank the editors of the journal and reviewers for their relevant contributions. Additionally, we would like to express our sincere gratitude to Sebastian Odunga (PhD candidate) for his invaluable assistance with the English-language editing of this manuscript. Finally, I would like to express my gratitude to the University of Debrecen Library, and Faculty of Business and Economics (University of Debrecen) for their support in funding my publication.

Conflicts of Interest

The authors declare that there are no conflicts of interest regarding the publication of this manuscript.

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Figure 1. PRISMA flowchart of the review process (Purnomo et al. 2022).
Figure 1. PRISMA flowchart of the review process (Purnomo et al. 2022).
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Figure 2. Article distribution over time.
Figure 2. Article distribution over time.
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Figure 3. Article distribution according to publishing countries.
Figure 3. Article distribution according to publishing countries.
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Figure 4. Summary of the influence of HRM on Financial performance. Developed from a literature review and Guest’s (1997) model.
Figure 4. Summary of the influence of HRM on Financial performance. Developed from a literature review and Guest’s (1997) model.
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Table 1. The PRISMA approach for systematic literature reviews.
Table 1. The PRISMA approach for systematic literature reviews.
Study designThe study employs a systematic literature review to condense the body of existing research.
Review protocolTo reduce the possibility of “biased post hoc decisions in review methods” (Purnomo et al. 2022), the search criteria and related keywords have already been determined by reviewers.
Eligibility criteria and publication type includedOnly articles published in peer-reviewed journals were deemed eligible. Peer-reviewed publications from the electronic databases Google Scholar, Scopus, and Web of Science were located.
Publication time frame2006–2024
LanguageEnglish
Search strategySelected the codes to search in the source database: “HRM” AND “Financial Performance” OR “Cooperative”.
Categories: finance, business; management; cooperative studies.
Full-text articles were identified for the subsequent eligibility and inclusion decision.
Table 2. Systematic literature review.
Table 2. Systematic literature review.
AuthorMethodologyMain Finding
Hijazi et al. (2024)The quantitative approach of questionnaire from 353 employees of Jordanian Banking.Employee training, incentives, and decentralization contribute positively toward financial performance.
Organizational culture increases the effects of HRM practices on financial results.
Byarugaba et al. (2022)Cross-sectional survey design of 401 owners–managers of the small business operating in South Africa. Human resource management practices, psychological capital, and financial performance are positively correlated to one another.
Nguyena et al. (2020)Audited annual reports and questionnaires from firms listed on HOSE.Training and developing personnel skills; developing recruitment activities to ensure the most suitable input resources for firms.
Chinyamurindi et al. (2021)A questionnaire was filled in by 401 small businesses.The results confirm that a direct relationship exists between HRM strategy and financial performance.
Khan et al. (2020)From 99 companies a total of 2126 employees participated.HRM has a direct impact on financial performance and the impact of individual human resource management systems and policies.
Meier et al. (2021)A total of 591 companies were included; 1405 firm–year observations from 36 industries were made based on VIGEO classification.Significant quadratic relationship between HRM–CSP and CFP. Inverted U-shaped relationship.
Papaioannou et al. (2024)Empirical data from 172 managers of Greek sports services firms.HRM practices significantly impact innovation activities, which have a significant and positive effect on perceived financial performance.
Mulolli and Boskovska (2020)Descriptive and comparative method, questionnaire, and econometric model. If a firm’s managers use the appropriate HRM practices, the enterprise can be in competition with competitors or even pass them in a positive aspect.
Bakator et al. (2019)A systematic review was conducted.A positive relationship between HRM practices and overall business performance was found. In addition, HRM has a positive influence on employee well-being, productivity, and organizational climate.
Ghosh and Chaudhury (2019)Qualitative studies were conducted.Concluded that firms operating in democracies, such as India, demonstrated higher financial performance metrics compared to those in more authoritarian systems. It highlighted that better governance practices promote transparency and accountability.
Saridakis et al. (2017)A meta-analysis of longitudinal studies was conducted.A set of integrated, mutually reinforcing high-performance best practices has a stronger impact on firm performance than HRM practices have individually.
Mutua (2019)A total of 340 cooperatives in Kenya were included. Qualitative and quantitative research was conducted.A significant relationship exists between human capital resourcing practices and the performance of cooperatives.
Kumar and Kaur (2015)Collected qualitative data from employees.HRM in cooperative banks in India emphasizes the positive impact of developing human resources on organizational performance.
Shakir et al. (2020)Analyzed 135 questionnaires using a linear regression model.A positive and significant relationship between the human capital of cooperative board members and cooperatives’ performance.
Priyadharshini et al. (2015)A content analysis of annual reports and a regression analysis was conducted.HRM practices significantly impact firm financial performance, and market capitalization positively influences human resource management practices.
Ramos-Torres (2017)Sampling of nearly one thousand firms.High-performance work practices have a significant impact on output and financial management, reducing turnover and increasing productivity.
Sojka (2015)Experimental research on a sample of 102 organizations.Causality between HR practices and economic performance was not proven; a positive correlation was found when management practices were at average or higher levels, with remuneration being a factor.
Mutua et al. (2012)A comprehensive analysis was conducted.Develops a conceptual framework that links human resource management practices and firms’ performance.
Morrison (2011)Qualitative interviews and case studies were conducted.Showed that democratic HRM practices promote a culture of openness that fosters innovation and creativity in teams, resulting in better financial outcomes.
Bakker et al. (2009)Used a quantitative approach using surveys by employed structural equation modeling.Opined that participatory governance increases employee engagement, which can lead to enhanced firm performance.
Lambooij et al. (2006)Multilevel regression analysis was used to test hypotheses and Kendall’s tau-b for a macro-level analysis. The more HRM practices are aligned within themselves, the better employees know what is expected of them, and the more they behave cooperatively towards their co-workers and their supervisors.
A negative relationship was observed between cooperation with co-workers and turnover, a positive relationship with sick leave was observed.
Source: Developed from the literature review.
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MDPI and ACS Style

Chali, B.D.; Lakatos, V. The Impact of Human Resource Management on Financial Performance: A Systematic Review in Cooperative Enterprises. J. Risk Financial Manag. 2024, 17, 439. https://doi.org/10.3390/jrfm17100439

AMA Style

Chali BD, Lakatos V. The Impact of Human Resource Management on Financial Performance: A Systematic Review in Cooperative Enterprises. Journal of Risk and Financial Management. 2024; 17(10):439. https://doi.org/10.3390/jrfm17100439

Chicago/Turabian Style

Chali, Birhanu Daba, and Vilmos Lakatos. 2024. "The Impact of Human Resource Management on Financial Performance: A Systematic Review in Cooperative Enterprises" Journal of Risk and Financial Management 17, no. 10: 439. https://doi.org/10.3390/jrfm17100439

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