The Reality of Relationship between the HRM Practices and Organizational Performance (Open the Black Box)

This study focuses on the fact of the relationshipbetween Human Resources Management Practices andOrganizational Performance which have been the center ofattraction for many researches and studies. The effect of humanresource management practices positively on employee outcomesand then on organizational performance is the engine oforganizations to sustain the competitive advantage, and themanagement of this worthy resource can lead to success.objectives: The main objective of this study is: To assess theeffect of human resources management practices on theorganizational performance of small businesses throughexamining the causal order of the main variables (HumanResources Management, Employee Outcomes, andOrganizational Performance) in an attempt to unfold the socalled“Black Box” to clarify the ambiguous relationship betweenhuman resources management practices and organizationalperformance. To achieve this objective, a quantitative researchstudy was conducted on a sample consisting of 265 Malaysiasmall businesses working in manufacturing sector. Structuralequation modeling with Amos 20 was used as an advancedquantitative measure beside other statistical measures in order toattain the prior objectives. Results: The main findings of thestudy were; the existence of a significant relationship betweenhuman resources management practices as one “bundle” andorganizational performance, and significant relationshipsbetween the component of employee outcomes and both humanresources management practices and organizationalperformance. Conclusion: the human resources managementcould be one of the most significant strategies to achieve thecompetitive advantage