Human Resource Management Practices and Financial Performance: Test of Le Louarn and Wils (2001) Staircase Model in a Free Financial Market Context

Abstract

The objective of this work is to test Le Louarn & Wils (2001) staircase model from the study of the link between Human Resource Management (HRM) Practices and Financial Performance captured by Return On Equity (ROE). The study focuses on a sample of 73 financial institutions operating in Cameroon. As analytical techniques, we use the method of causal analysis mediating effects of Baron & Kenny (1986) and an alternative approach based on the length of the string to parse. The main results show that only the integration and incentive compensation practices allow a partial validation of Le Louarn & Wils (2001) staircase model.

Keywords: HRM practices; financial performance; Le Louarn & Wils (2001) staircase model; mediating effects.