9.7 Conclusions
.........................................................................................................................................................................................
The starting point of this chapter was to explore HRM in its societal embeddedness.
OurWrst key aim was to emphasize the value of new institutionalism as an additional
theoretical perspective explaining the shaping of HRM in diVerent environments.
Our second key aim was to develop the idea of ‘strategic balance’ theory concerned
with economic and relational rationalities—with the latter involving organizational
justice at the individual level and organizational legitimacy at the organization level.
Institutional theory has been criticized for putting too much emphasis on
stability, for being deterministic, and for placing too much emphasis on the
conservative and conserving nature of institutions. In response to these criticisms,
we showed how institutional theory is able to encompass change, the role of
agency, and processes of deinstitutionalization. The interplay between, on the
one hand, institutional factors which force an organization to comply with rules
and regulations in order to bring about legitimacy and, on the other, the competi-
tive market place, where strategic choice and leeway will allow an organization to
position itself diVerently (in order to achieve a competitive advantage), led us
Wnally to the importance of strategic balancing (Deephouse 1999 ). Not only isWt
between HR and competitive strategy a necessary condition for organizational
success, but so too is institutionalWt.
The advantage of our approach is that we can complement the present academic
interest in the linkage between HRM and performance with wider institutional
factors inXuencing the choice of HR practices. The theoretical concepts used in this
chapter shift the attention from internal organizational resources to a more
interactive level, relating the organization to its environment, and making us
more conscious of the role of taken-for-granted assumptions and mimetic, nor-
mative, and regulatory mechanisms in the wider context. Our approach can be
used in diVerent institutional settings, including regions, countries, and sectors
(see, for example, Paauwe 2004 ). The approach oVers a fruitful perspective for
cross-national and cross-sectoral comparative research into the eVects of various
institutional mechanisms on the shaping of HR practices and their possible
relationship with performance. HR practices should meet the demands of the
market place (e.g. for eYciency and agility) and the institutional setting (for social
legitimacy), while at the same time being perceived as fair and just by employees.
References
Baird, L., and Meshoulam,I.( 1988 ). ‘Managing Two Fits of Strategic Human Resource
Management.’Academy of Management Review, 13 / 1 :116 28.
hrm and societal embeddedness 181