A distinguishing feature of strategic human resource management research is an emphasis on human resource (HR) systems, rather than individual HR practices as a driver of individual and organizational performance. Yet, there remains a lack of agreement regarding what these systems are, which practices comprise these systems, how these systems operate, and how they should be studied. Our goal in this paper is to take a step toward identifying and addressing several conceptual and methodological issues regarding HR systems. Conceptually, we argue that HR systems should be targeted toward some strategic objective and operate by influencing (1) employee knowledge, skills, and abilities, (2) employee motivation and effort, and (3) opportunities for employees to contribute. Methodologically, we explore issues related to the relationships among policies and practices, sampling issues, identifying the appropriate referent group(s), and who should serve as key informants for HR system studies.

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1. Is the net income of a year the money the company made that particular year or is it a

number whose significance is quite doubtful?

2. Is depreciation the loss of value of fixed assets?

3. The so-called "cash flow" (net income plus depreciation) is a flow of cash, but is it a

flow to the shareholders or to the company?

4. The dividend is the part of the net income that the company distributes to

shareholders. As the dividend represents real money, the net income is also real

money. Is that true?

5. The part of the net income that is not distributed to shareholders goes to reserves

(shareholders' equity). As dividends represent real money, reserves are also real

money. Is that true?

6. Does the shareholders' equity represent the savings a company has accumulated

through the years?

7. Is book value the best proxy to the value of the shares?

8. Is a valuation realized by a prestigious investment bank a scientifically approved

result which any investor could use as a reference?

9. Is it possible for a company with a positive net income and which does not distribute

dividends to find itself in suspension of payments?

2 - IESE Business School-University of Navarra

10. There are four ways a company can use the money it generates: a) buying other

companies or assets; b) reducing its debt; c) distribute it to shareholders, and d)

increasing its cash holdings. What other reasonable things can it do?