Research Model and Hypotheses
Considering Black (2001: 26), who advocates that “three key elements are required
for any successful SEM analysis: strong theory, a well-specified measurement
model, and a sound modelling strategy”, the purpose of this section is to present a
strong theory for linking HRD with organizational performance, because there is a
substantial lack in HRD theory building (Lynham, 2000). We start with the Becker
and Huselid (1998) HRM-performance linkage model, which has been categorised
as the “most logical and definite model of the processes through which HR practices
affect firm performance” (Wright et al., 2003: 25). The core philosophy of this model
suggests that HR practices have a direct impact on employee skills and motivation,
which are subsequently translated into improved operating performance, that has a
direct impact on financial performance.