investments in, HRP and SHRM. Thus, when we observe a relationship between HRP, SHRM, and firm performance, it is because these procedures only survive over the long run in firms where they have proven to be effective. In such a scenario, we might not expect the use of HRP and SHRM to be widespread. For this argument to be plausible, at a minimum, we would need to establish that firms sharing certain characteristics, perhaps operating in similar environments, are more likely to adopt HRP and SHRM. To begin to evaluate the validity of this contention, the prior on the factors associated with the adoption of these procedures is reviewed below.
Determinants of the Use of HRP and SHRM
Unfortunately, research on the antecedents of HRP and SHRM is very limited. One of the few relevant studies was conducted by Fiorito, Stone & Greer (1985), who found firm size and industry, prior HRP use, and medium- to long-term business planning horizons to positively affect the adoption of HRP. These factors, and others as well, could also be expected to affect the adoption of SHRM. For example, the presence of HR profesionals in the development and implementation of the firms strategic business plan is likely to be related to the use of HRP and sHRM. In addition we might expect the returns from investments in HRP and SHRM to be greater, and therefore these procedures more prevalent, in firms investing more intensively in research and development, in more capital intensive firms, in those businesses with greater recent growth, and in firms with a greater concentration of unionized employees Thus
Hypothesis 1: Firm size, overall business planning sophistication, involvement of the HR department in the business planning process, research and development intensity, prior firm growth, capital intensity, and the level of union coverage will be positively related to the adoption of HRP and sHRM
Although prior work has most often focused on the impact of firm-specific factors (such as firm size or industry) on the adoption of HRP and SHRM, recent work has also argued that a number of factors external to the organization, e.g., the environment within which the firm operates, will influence the adoption of these procedures as well. For example, Huselid and Hunt (1993) found that the decision to use HRP and SHRM was a function of the perceptions of the need for such planning, which, in turn, were influenced by volatility in the firm's environment. Likewise, Craft (1980) noted that an analysis of the environment in which the firm functions is an important indicator of the length of planning horizon that is feasible. A similar view was articulated by Dyer (1983), who argued that:
It is almost axiomatic among planners that stable environments make planning simultaneously easier and less necessary, while unstable environments have the opposite effect. Presumably, the nature of an organ nization's environment affects the acceptability of HRP, with some degree of tumult short of chaos being the more favorable circum tance.