Strategic Human Resource Management, a Road to Organizational Performance: Evidence from Public Sector Organizations in the Oil and Gas Sector

Underpinning the premises of the Ability, Motivation, Opportunity (AMO) paradigm, this study examines the effects of Strategic Human Resource Management (SHRM) on Organizational Performance (OP). Although several studies have investigated the relationship between SHRM and OP, how SHRM would significantly enhance OP still needs to be clarified. This study split the HR practices of Indian oil and Gas companies into three components, i.e., ability improving, motivation improving, and opportunity improving practices, to investigate the effects on organizational performance in large public-sector Indian oil companies. Drawing from the arguments and assumptions of the Social Exchange theory, this study uses a mixed research design. It employs semi-structured interviews (N = 30) and a self-developed scale to collect data from the oil and Gas sector executives. The study used a stratified random sampling technique to collect primary data using a 5-point Likert questionnaire from 234 executives from 10 Indian Oil and Gas companies. For data analysis and hypothesis testing, the study used Structural Equation Modeling (SEM). Results indicate that the three components had different effects on the performance. The findings show that ability-enhancing HR practices are significantly associated with firm performance, whereas HR practices that enhance ‘motivation’ and ‘opportunity’ are not significantly related to performance. The study makes a significant contribution by developing a scale in the context of the public sector for measuring SHRM based on the AMO framework. The study concludes that the relationship between SHRM and performance could be better understood by breaking down HR practices and creating configurations or bundles.