Hierarchical distance as a moderator of HRM practices on organizational performance

Purpose – The purpose of this paper is to examine the moderator role of hierarchical distance (HD) in the relationship between human resources management (HRM) practices and organizational performance (OP, perceived/financial). To date there is no empirical evidence that demonstrates whether HD affects this relationship. Design/methodology/approach – These relationships are examined through an empirical study of 102 small- and medium-sized enterprises from Europe (Spain). Partial least squares structural equation modeling is used to test the moderator effect of HD. Findings – The results show that HD is a cultural dimension which moderates the relationship between HRM practices and OP. Furthermore, when OP is studied in relation to HRM practices, the use of perceived measures are considered more appropriate as these indicate the opinion of employees and managers regarding about OP. Research limitations/implications – The non-cross-sectional character of the paper. Practical implications – Organizations should consider HD when deciding the structure and application of their HR practices, since a lesser HD has positive effects on business results. Originality/value – Little attention has been paid to non-linear models, with particular reference to the inclusion of cultural dimensions – such organizational culture (i.e. HD) – in HRM models.