Relationship between implementation of sustainable human resource practices and corporate market value

Abstract

Orientation: The sustainable development goals (SDGs) were the context for examining the human resource (HR) expertise required in the boardroom. Achievement of SDGs depends on how boards are structured and whether members have the appropriate expertise to implement key HR practices to maximise corporate market value.

Research purpose: This study aimed to critically examine the mediation effect of HR expertise in the boardroom on the relationship between implementation of human resource practices (HRPs) and market value.

Motivation for the study: The study investigated whether HR expertise in the boardroom contributes to the implementation of key HRPs to achieve employee-related SDGs.

Research approach/design and method: A randomised experimental design was performed through a bootstrap procedure to examine mediation. Data were collected from corporate annual reports through a self-constructed measurement instrument or disclosure index.

Main findings: Overall, no evidence of a mediation was found, except in the case of HR expertise in the board and HR and/or remuneration committee, which yielded a statistically significant mediation effect on the implementation of some initiatives with confidence intervals close to zero.

Practical/managerial implications: Human resource expertise in the boardroom plays a crucial role in achieving the SDGs, and the lack thereof affects the company’s market value. Therefore, the board of directors (BoDs) must prioritise sufficient HR expertise in the relevant structures to facilitate implementation of HRPs to achieve the SDGs.

Contribution/value-add: This study is the first attempt of its kind in South Africa, and the results demonstrate the absence of a mediation effect, signalling that a lack of HR expertise in the boardroom could affect organisations’ achievement of the SDGs.