Configuration of Human Resource Management Practices, Organizational Characteristics, Social Capital and Performance of Firms Listed in the Nairobi Securities Exchange

Abstract

The human resource function may play a significant role in helping organisations and individual employees acquire the core qualities that drive high performance. Over time however, institutions including Nairobi Securities Exchange (NSE) with their administrative and proficient uniqueness have indicated poor performance. Thus, the aim of the study was to determine how configurations of HRM practices, organizational characteristics, and social capital influenced the performance of firms listed in the NSE. The research was anchored on the Ability-Motivation-Opportunity (AMO) theory, Social Exchange Theory (SET), and Social Capital Theory (SCT). This research applied the positivist approach as well as a descriptive cross sectional research design. The target population included 65 firms listed at the Nairobi security Exchange. Both primary and secondary data were employed. Questionnaires were used to gather primary data whereas secondary data collected information relating to return on Assets (ROA). Descriptive and inferential statistics were utilized to analyse the data. The method utilized was simple linear regression and multiple linear regression analyses. Both stepwise and hierarchical approaches as suggested by Baroni and Kenny (1986) were followed. From the findings, configurations of human resource management practices had a significant influence on the performance of firms listed in the NSE. Social capital was also found to have a moderating influence ion the relationship between HRM practices configurations and listed firms’ success at the NSE. In addition, the study revealed that organizational characteristics had a significant intervening effect on the relationship between HRM practices configurations and firm performance on the NSE. Furthermore, there was a confirmed joint effect of configurations of human resource management practices, social capital and organizational characteristics on performance of firms listed at NSE. The findings imply that organizations with HRM practices that suit the professional package score much higher on metrics of firm performance, workers' stepping above commitment, and company innovation. Also, organizations considering aspects of social capital identify the value in relationships among people, and often this relational type of capital is missing in HRM. Results imply that organizational characteristics including size, unionization, industry or business conditions are not significant and thus may not offer the foundation for aligning resources with corporate strategy goals and ultimate performance. Based on the findings, the study recommends that configurations of human resource management practices should be linked with business strategy to improve employee satisfaction and performance, ensuring that teams are working together to assist the company accomplish its strategic goals, and raise their influence and decision-making authority across the organizations. Configurations of HRM practices, organizations ought to understand that social capital is just as essential as conventional human capital, and merging the two may assist HRM better manage employee career advancement, task staffing, and team building hence record positive performance. This study focused solely on listed trading firms at NSE. Thus a similar study could be done on non-listed trading firms on the NSE, Kenya.