Do firms in impoverished societies perform better? Empirical evidence from Spain
DOI:
https://doi.org/10.51302/rtss.2016.2202Keywords:
human poverty, human resource management, firm performanceAbstract
From the position of the strategic human resource management, this study argues and empirically demonstrates that the degree of human poverty in a region has a negative impact on the employment productivity of the firms located within it. This harmful effect is seen both directly and indirectly through firms’ lower commitment to their employees. These are the findings from a longitudinal analysis undertaken during a six-year period (2006-2011), based on data from 2,192 industrial companies located in all 17 Spanish autonomous communities. At the same time, the study explores how the two components of human poverty (economic poverty and poverty of human capital) respectively influence each one of the three components (remuneration, job security and training) of the organization's commitment to its employees, and their subsequent effect on firm performance. Results show that poverty of human capital is notably the attribute with the greatest influence on labour productivity. The results of this study will help managers, social agents and public institutions to rigorously evaluate the impact that poverty in a society has on business competitiveness.
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