Critics have argued that the field of human resource management (HRM) lacks a coherent theoreticalframework. This article attempts to further the theoretical development of SHRM through discussing six theoretical models (behavioral perspective, cybernetic models, agencyltransaction cost theory, resource-based view of the firm, power/resource dependence models, and institutional theory) that are usefulfor understanding both strategic and non-strategic determinants of HR practices. Finally, the implications of a stronger theoretical approach to SHRM research and practice are discussed.

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Studies of the relationship between human resource (HR) practices and firm performance typically use a single respondent to assess firm level HR practices or HR effectiveness. However, previous research in other substantive areas suggests that rater differences are a potentially important source of measurement error. We demonstrate analytically the potential consequences of both random and systematic measurement error in research on HR and firm performance. However, our main focus is on random error and we show how generalizability theory can be applied to obtain better estimates of reliability by simultaneously recognizing multiple sources (e.g., items, raters) of random measurement error. These more inclusive reliability estimates, in turn, offer the possibility of more precisely quantifying substantive relationships in the HR and firm performance literature. In our sample, reliabilities (as estimated by generalizability coefficients) for single-rater assessments of HR variables were generally below .SO. This degree of measurement error, if present in substantive studies on HR and firm performance, could lead to considerable bias, given that an unstandardized regression coefficient is corrected for measurement error in the independent variable by dividing by its reliability coefficient (not its square root). We also found only limited convergent validity between HR and line managers ratings of a second type of HR measure, HR Barry Gerhart is now at the University of Wisconsin-Madison We thank the reviewers for their helpful comments. COPYRIGHT 8 2000 PERSONNEL PSYCHOLOGY, INC 804 PERSONNEL PSYCHOLOGY effectiveness. In general, our findings suggest that future researchers need to devote greater attention to measurement error and construct validity issues. Our study provides an example of how generalizability theory can be useful in this pursuit.In recent years, we have seen a good deal of attention focused on better understanding how firms' human resources (HR) decisions influence their financial performance. Conceptual work continues to emphasize the traditional view that HR decisions have an impact through building human capital (skills and abilities) and enhancing motivation toward a firm's objectives. However, it also suggests that HR may differ from other types of resources (e.g., technology) because of the greater difficulty in imitating successful HR systems and because of HR's unique role in organizational learningWe do not argue that [the firm] is the only appropriate level of analysis, or that this research question is not without significant methodological