Introduction

Literature review and hypotheses development

Methods of study

Results

Discussion

Theoretical implications

Limitations and future research directions

Conclusions

References

Abstract

Purpose – This study aims to examine the adoption and efficacy level of progressive human resource management (HRM) practices in various organizations operating in India. Design/methodology/approach – Primary data based on 615 respondents from 103 domestic firms and 116 foreign multinational corporations (MNCs) operating in India were gathered and analyzed using statistical techniques like t-test, confirmatory factor analysis and structural equation modeling. Findings – The results reveal that the adoption of progressive HRM practices in form of self-managed teams, flexibility to work flexible hours, use of online mediums to invite applicants, selection of candidates using assessment center and integrity test, performance based incentives, flexible benefits, facility of e-learning and innovative management development programs is positively related to firm performance in Indian context. Using institutional and cultural perspective, the findings have also demonstrated that their exist differences in adoption of progressive HRM practices between foreign MNCs and domestic firms. Practical implications – Domestic firms in India are needed to learn some important managerial lessons from the foreign MNCs, especially when their adoption of progressive practices results in more increase in firm performance. These are suggested to implement a broad range of innovative HR practices like MNCs to improve growth potential, instead of focusing on two or three practices. Originality/value – By exploring the differences between domestic and foreign MNCs, this study has offered some key insights on the extent of adoption and operationalization of progressive HRM in current Indian business environment.

Introduction

Since the triggering of liberalization and economic restructuring programs in 1990s, India has witnessed a remarkable growth (Som, 2008). With this outstanding progress, the issues pertaining to increased globalization, ever changing customer and investor demands, and heightened competition to generate innovative products and services have become the standard backdrop for the organizations operating in India (Budhwar, 2012). Organizations have now realized that to manage these issues, they have to constantly increase their performance through reduction in various costs, improvement in quality of products, and differentiation in their products and services. In the opinion of Subramaniam and Youndt (۲۰۰۵), an organization’s ability to improve its performance while developing continuously very much depends upon its “human capital”. Further, Bhatnagar (2006) has opined that organizations in India are increasingly becoming aware of “human capital” as their most important asset in contrast to the technology, IT infrastructure, and the large-scale operations that can no longer be considered as effective tools for gaining an edge over competitors for a long time. This shifted focus on “human capital” has directly impacted the functioning of HR departments in Indian organizations which, in turn, have responded back with development of a domestic workforce proficient in facing the challenges brought forth by the entry of foreign multinational corporations (MNCs) in Indian market (Budhwar and Bhatnagar, 2009).