Learning to compete: The performance effect of human resource management and work organization in the South Indian garment industry

This dissertation examines the impact of human resource management (HRM) on factory performance in the Indian garment exporting industry, where investment in HRM is often perceived as a cost with limited benefits. Using panel data from 42 garment manufacturers in Bangalore and Chennai a rich picture is constructed of how factories in this region manage their workforces. Four matched-pair case studies explore the relationship between HRM and factory performance in more depth.; This study finds that the presence of more advanced HRM systems has a tangible and positive effect on production efficiency and quality performance outcomes, but that the relationship is more nuanced than previous studies on the subject predict. Worker participation, employee voice, diffused training, superior data collection and management systems are found to be the key differentiators in the performance of establishments. Yet despite the overall positive relation between innovative HRM and performance, the degree of the performance effect is substantially influenced by local labor market conditions and local management skill and experience.; The main source of information on innovation in HRM and work organization for the establishments surveyed is found to be their foreign buyers. But, contrary to assumption, pressure from these buyers to implement improved systems is not required for the presence of advanced HRM systems and work organization. Knowledge on best practices is being transferred within firms from their exporting divisions to their units manufacturing for the domestic Indian market. Garment manufacturers for the domestic market are incorporating best practice on HRM and work organization because it delivers business benefits from product quality and production efficiency to enhanced brand value and reputation. This finding is encouraging for the sustainability of best practice.