Estimating the Firm's Demand for Human Resource Management Practices

This paper makes three innovative contributions to the field of human resource management. First, an HRM frequency distribution is presented that depicts the key empirical facts that form the center of research in the field; second, a new microeconomics-based model is presented that develops a new theoretical and empirical tool - the HRM demand function - and uses this tool to predict the performance maximizing level of HRM expenditure; and third, a unique data set is used to estimate the parameters of the HRM input demand function for several American hundred companies. A variety of new insights and implications emerge.