A high-growth firm contingency test of the formalization-performance relationship

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Abstract

The effect of formalization in high-growth firms' performance is still unclear. We propose that formal commitment-based human resource practices contribute positively to the financial performance of established high-growth firms but have little effect on emergent ones. Using a sample of 101 Portuguese high-growth firms (2006–2009 period), we tested the effect of formal HR practices during the high-growth period in their financial results two years later (2011). Our results suggest that adopting a formal performance appraisal and a formal R&D function contributed positively for the performance of only established firms, while adopting a formal training activity negatively affected the performance of only emergent firms.

Original languageEnglish
Pages (from-to)374-396
JournalJournal of Small Business Management
Volume57
Issue numberS2
DOIs
Publication statusPublished - Nov 2019

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Personnel
Formalization
Contingency
High-growth firms
Financial performance
Firm performance
HR practices
Human resource practices
Financial result
Performance appraisal

Cite this

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title = "A high-growth firm contingency test of the formalization-performance relationship",
abstract = "The effect of formalization in high-growth firms' performance is still unclear. We propose that formal commitment-based human resource practices contribute positively to the financial performance of established high-growth firms but have little effect on emergent ones. Using a sample of 101 Portuguese high-growth firms (2006–2009 period), we tested the effect of formal HR practices during the high-growth period in their financial results two years later (2011). Our results suggest that adopting a formal performance appraisal and a formal R&D function contributed positively for the performance of only established firms, while adopting a formal training activity negatively affected the performance of only emergent firms.",
author = "An{\'i}bal L{\'o}pez and Pedro Neves and Cunha, {Miguel Pina}",
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