Investir em pessoas compensa?

Universidade do Minho Escola de Psicologia Lígia Maria Seabra dos Reis Santiago dos Santos Portovedo julho de 2021 Investir em Pessoas Compensa? Lígia Portovedo Investir em Pessoas Compensa? UMinho|2021 Lígia Maria Seabra dos Reis Santiago dos Santos Portovedo julho de 2021 Investir em Pessoas Compensa? Trabalho efetuado sob a orientação da Professora Doutora Ana Veloso e do Professor Doutor Miguel Portela Tese de Doutoramento Doutoramento em Psicologia Aplicada Universidade do Minho Escola de Psicologia ii DIREITOS DE AUTOR E CONDIÇÕES DE UTILIZAÇÃO DO TRABALHO POR TERCEIROS Este é um trabalho académico que pode ser utilizado por terceiros desde que respeitadas as regras e boas práticas internacionalmente aceites, no que concerne aos direitos de autor e direitos conexos. Assim, o presente trabalho pode ser utilizado nos termos previstos na licença abaixo indicada. Caso o utilizador necessite de permissão para poder fazer um uso do trabalho em condições não previstas no licenciamento indicado, deverá contactar o autor, através do RepositóriUM da Universidade do Minho. Licença Concedida aos Utilizadores deste Trabalho Atribuição CC BY https://creativecommons.org/licenses/by/4.0/ iii AKNOWLEDGEMENTS This work was produced with the precious help of so many people that I can go no longer before identify them, out of an imperative of pure justice. My family, my friends, my fellow students, my professors, the staff of the School of Psychology, everyone, at one time or another, or throughout the entire doctoral program, were decisive for me to be able to complete the work presented here. My advisors, Professor Ana Veloso and Professor Miguel Portela, managed to make a transformation, under very difficult conditions: to bring an operating professional, in her 50s, into science. It can't be too much to thank them for all the effort, patience and competence that this involved! I am particularly grateful to Professor José Keating, who so often helped me to think, to my PhD colleague, Hélder Costa, for his invaluable help in statistics, to Dr. Filipe Silva, for clarifying the accounts in the financial reports. To my son, Pedro Portovedo, I am grateful for the competent revision of the texts in english, for having listened to me with interest, for suggesting clues to me, for having lived with me the adventure in science. The people mentioned here are the ones who generously participated in this work. Others, so many, generically included in the first paragraph, deserve all my gratitude, for providing me with the necessary support to not give up. Thank you all so much! iv STATEMENT OF INTEGRITY I hereby declare having conducted this academic work with integrity. I confirm that I have not used plagiarism or any form of undue use of information or falsification of results along the process leading to its elaboration. I further declare that I have fully acknowledged the Code of Ethical Conduct of the University of Minho. v ABSTRACT Investing in People Pays Off? This work intends to contribute to a better understanding of the impact of psychological variables on organizational performance and to point out new sources of information that can contribute to deepening HR Analytics in companies. Concretely, we study the variation in organizational performance when companies invest in employees and when companies do not invest, in order to answer the question “Investing in people pays off?”. We also analyze the relationship between context and performance, taking the organization as a unit of analysis. With this goal, we present one study on the effects of investment in human capital and another one the effects of job insecurity on organizational performance. We conclude that: 1. 1% increase in Investement in Human Capital produces an increase of 0,63% in Gross Value Added in the same year, and 0,65%, if the increase is consistent for 2 years. We also conclude that the organizational context, in which behaviours occur, has a positive impact on performance, especially when the Investment in Human Capital is made in decline context of firm; 2. for every 1% of Qualitative Job Insecurity, Gross Value Added decreases 5,4% and Net Sales decreases 5,3% in small firms. We also conclude that in the organizational context of shake-out, for every 1% of cases of Qualitative Job Insecurity, Gross Value Added decreases by 8.5% and Net Sales 4.8%. No related effect for Quantitative Job Insecurity was found. Finaly, we present and discuss a proposal for an integrative theoretical model. The model is based on our reflections upon the two previous studies and also on theoretical models that allowed us to understand the relationship between a psychological variable (e.g. job insecurity) and organizational performance. We propose an aggregating theoretical model, ancored on the Conservation of Resources Theory, Social Exchange Theory and Trust to understand the results of empirical studies on mediation and moderation between Job Insecurity and Organizational Performance, published between 2000 and 2020. Keywords Investment in Human Capital, Job Insecurity, Organizational Performance, Trust vi RESUMO Investir em Pessoas Compensa? Este trabalho pretende contribuir para uma melhor compreensão do impacto das variáveis psicológicas no desempenho organizacional e apontar novas fontes de informação que possam contribuir para o aprofundamento da análise dos dados de recursos humanos, nas empresas. Concretamente, estudamos a variação no desempenho organizacional quando as empresas investem nos funcionários e quando as empresas não investem, a fim de responder à pergunta “Investir nas pessoas compensa?”. Analisamos também a relação entre contexto e desempenho, tomando a organização como unidade de análise. Com esse objetivo, apresentamos um estudo sobre os efeitos do investimento em capital humano e outro sobre os efeitos da Insegurança no Emprego no Desempenho Organizacional. Concluimos que: 1. O aumento de 1% no Investimento em Capital Humano produz um aumento de 0,63% no Valor Acrescentado Bruto, no mesmo ano, e de 0,65%, se o aumento for consistente por 2 anos. Concluímos também que o contexto organizacional, no qual ocorrem os comportamentos, tem impacto positivo no desempenho, principalmente quando o Investimento em Capital Humano é feito no contexto de declínio da empresa; 2. para cada 1% de Insegurança Qualitativa no Trabalho, o Valor Acrescentado Bruto diminui 5,4% e o Volume de Negócios diminui 5,3% nas pequenas empresas. Concluímos também que no contexto organizacional de reestruturação, para cada 1% de casos de Insegurança Qualitativa no Emprego, o Valor Acrescentado Bruto diminui 8,5% e o Volume de Negócios 4,8%. Não foi encontrado nenhum efeito de Insegurança Quantitativa no Emprego. Por fim, apresentamos e discutimos uma proposta de modelo teórico integrativo. O modelo baseia-se nas nossas reflexões sobre os dois estudos anteriores e também em modelos teóricos que nos permitiram compreender a relação entre uma variável psicológica (insegurança no emprego) e o desempenho organizacional. Propomos um modelo teórico agregador, ancorado na Confiança, na Teoria da Conservação de Recursos e na Teoria das Trocas Sociais, para compreender os resultados dos estudos empíricos sobre mediação e moderação entre Insegurança no Trabalho e Desempenho Organizacional, publicados entre 2000 e 2020. Palavras-chave Confiança, Desempenho Organizacional, Insegurança no Emprego, Investimento em Capital Humano vii Contents Introduction ......................................................................................................................................... 1 Current Relevance of the Topic .............................................................................................. 2 Relevance of the Theme to Literature ..................................................................................... 3 The Theme in Organizational Psychology and Economic Psychology ....................................... 5 Originality .............................................................................................................................. 6 The Indirect Study of Psychological Variables ........................................................................... 6 Investment in Human Capital and Organizational Performance .......................................................... 14 Job Insecurity and Organizational Performance ................................................................................ 65 Contributions to an Integrative Theoretical Framework .................................................................... 111 Conclusion .................................................................................................................................... 157 Contributions to Literature ................................................................................................ 157 Contributions to Organizational Psychologists and Human Resources Managers ................ 159 Suggestions for Research .................................................................................................. 159 A Personal Note ................................................................................................................ 160 4 perspective, which has been criticized as dominant in the investigation of work and organizational psychology on HRM, specifically for being useful to management and anti-unionist (Troth & Guest, 2020). In fact, we believe that our theme and the work we present here, while adopting the employer's point of view, is both useful to employers and employees, as it contributes to better understanding the effects of investment on people working in organizations and, consequently, contribute to its valorization. We also intend to address the question of the organization's context, both from the point of view of its sector of activity, and from the point of view of the stage of development of the organization and to understand the effects on organizational performance, an aspect that has deserved criticism for being absent from HRM literature (Kaufman, 2014), but that has been valued lately (Gomes, Rodrigues, & Veloso, 2015; Johns, 2006; Lübke & Erlinghagen, 2014; Van de Voorde & Boxall, 2014). Research confirms that HRM has a positive effect on the operational performance and on the financial performance of organizations, by increasing motivation and building human capital (Jiang, Lepak, Hu, & Baer, 2012), both psychological variables. Based on human capital and job insecurity (job security is included in the dimension motivation-enhancing HR practices (Jiang et al., 2012)) we work on the effects of investing in people and not investing in people, to conclude whether or not there are benefits that result from this investment. According to Guest’s Employee Well-being Analytical Framework (Guest, 2017), our work addresses two categories, which are antecedents of well-being, enhancing individual and organization performance: • Investing in Employees, that includes recruitment and selection, training and development, mentoring and career support; • Positive Social and Psysical Environment , we address only the categories fair collective rewards/high basic pay and employment security/employability . Guest’s categorization is based on research on Quality of Working Life , which included eight HR practices without category differences (Guest, 2017). Our work, in the light of Quality of Working Life , addresses growth and security and adequate and fair compensation practices. Our goal, more than finding answers, is to contribute with a psychological perspective to understand the effects of HRM on the economic and financial performance of organizations, following the suggestion of the literature (Troth & Guest, 2020) and the empirical results achieved (Huselid, 1995; Huselid, Jackson, & Schuler, 1997; Jackson, Schuler, & Jiang, 2014; Jiang et al., 2012). 5 3. The Theme in Organizational Psychology and Economic Psychology This work project fits the theoretical range of the contributions of organization psychology to Human Resources Management. However, considering the scope and methodological aspects, this work can also be analiysed according the lens of economic psychology. Let us begin by revisiting the purpose definitions of the two branches of psychology: - “ Organizational psychology is the study of how individuals are recruited, selected and socialized into organizations; how they are rewarded and motivated; how organizations are structured formally and informally into groups, sections and teams; and how leaders emerge and behave. It also examines how the organization influences the thoughts, feelings and behaviour of all employees by the actual, imagined or implied behaviour of others in their organization. Organizational psychology is the study of the individual in the organization, but it is also concerned with small and large groups and the organization as a whole as it impacts on the individual.” (Furnham, 2005, p. 2). - Economic psychology studies behavior in an economic environment, related to the use of scarce resources such as money, time and effort (Van Raaij, 1999). “The economic environment is the environment of the firm or the environment of the department, division, or profit center within the firm, including the type and size of the organization.” (Van Raaij, 1999, p. 14). The aim of the two branches of psychology shows an overlap in the study of behavior in economic environment, since the organization, providing work in exchange for remuneration, already implies exchanging scarce resources: time and effort for money, in the case of the employee; money for time and effort, in the case of the employer. In this regard, Van Raaij considered “OrganizationaI psychology is in fact part of economic psychology […]” (Van Raaij, 1999, p. 14), suggesting that organizational psychology falls within the broader field of economic psychology, which also studies individual or aggregate economic behavior. As for methodology, economic behavior can be studied from direct observation or through inferences from environmental changes, that is using objective data as proxies for subjective phenomena. Methods used are adapted to the level of analysis that is intended to be carried out, from the individual behavior to the behavior of countries (Azar & Fetchenhauer, 2012; Van Raaij, W. F., Van Veldhoven, & Wärneryd, 1988). 6 4. Originality We study psychological variables through official databases ( SCIE – Sistema das Contas Integradas das Empresas and Quadros de Pessoal ), not yet explored for this purpose, and measure organizational performance through economic and financial measures. This suggestion of integrating concepts of strategy and economics, as well as the diversification of data sources, was already registered in the literature as a guide for future research in HRM (Wright & Ulrich, 2017), although we are not aware that it has been applied to work in the domain of organizational psychology. Organizational financial accounts are gathered in the database SCIE – Sistema das Contas Integradas das Empresas (INE, 2020) and the official employment survey Quadros de Pessoal (MTSS, 2020) are reported once a year in Portugal. These data, which integrate all organizations in the private sector, allow the study of the context in which employees work and the respective changes in organizational performance. We intend to contribute to explore a wealth of information that, although difficult to handle, is available for investigation and can be used by HRM professionals, when it will become fully supported by scientific and tecnhical knowledge. Relying on psychological theories that use the context as the main vector for modeling behaviors, and working on the referred databases, we propose to describe and discuss the effects of investing or not investing in employees and their consequences on organizational performance. 5. The Indirect Study of Psychological Variables The organization is a social actor, recognized as capable of producing its own decisions, endowed with volition, capable of acting and accountable for their behaviors (King et al., 2010). Literature about the relation between HRM and organizational performance tends to include employee attribution on employer/managers’ behaviour (Bowen & Ostroff, 2004; Nishii, Lepak, & Schneider, 2008; Van de Voorde & Boxall, 2014) and HRM practices are described as communications between employeremployee (Bowen & Ostroff, 2004). The organization has a unique identity and although not all individuals in the organization have the same perception of their identity, it is certain that the literature describes it as a collective phenomenon (Brown, Dacin, Pratt, & Whetten, 2006). In this context, we can say that the organization is for employees simultaneously a social actor, with whom they interact, and a context in which they interact with others. 7 There are, of course, individual differences in performance, which vary according to the complexity of the function: for highly complex functions (e.g. sales) the value of 47.5% difference was found for the standard deviation of the distribution, betwin the lowest and the highest performances (Hunter, Schmidt, & Judiesch, 1990). As the complexity of the job increases, it becomes more difficult to specify all the exact procedures to fulfill the function requirements and the level of performance becomes more dependent on the employee's skills and motivation. This means that investment in recruitment can have, among these employees, an appreciable impact on performance, if candidates selected are high performers (Cascio & Boudreau, 2010). Understaffing, for example, defined as the decrease in the cost of wages and bonuses per hour of work, is forced by management pressure but decreases profits of organizations (Ton, 2009). Work is understood as a cost that needs to be controlled because organizations do not produce the necessary analyzes to understand that, often, , increasing the headcount or benefits, pays off in profits obtained (Angrave, Charlwood, Kirkpatrick, Lawrence, & Stuart, 2016). Literature suggests new methods for analises of employees performance using Big Data (Guzzo, Fink, King, Tonidandel, & Landis, 2015) and Cost-Accounting Employee Performance , that proposes cash valuation of the variation in the performance of employees, based on accounting data (Birnberg, Luft, & Shields, 2007; Hall, 2016). However, low expectations of adherence to these new methods are recognized, due to the primacy that research in psychology gives to individual phenomena compared to social phenomena, and to the resistance of HRM professionals, who are suspicious that these kind of methods reduce people to numbers, have lack of adequate skills and a peripheric organizational position. All of this could leave psychology out of the exploration of Big Data and other HR Analytics (Angrave et al., 2016). In addition, there is another obstacle for HRM professionals: the exploration of how people create value for the organization must be carried out through longitudinal multivariate modeling, which consulting firms are also not prepared to do, limiting themselves to implementing best practices which ignore organization's conditions and strategy (Angrave et al., 2016). However, secondary data have already been used in psychological studies linking HRM to performance: historical data (Simonton, 2003), Big Data (van Thiel & van Raaij, 2019), accounting data (Shields, 1997). According to what we have explained, the sources used in our work have a history of research in psychology and correspond to a recommended trend. Money, our measure for some variables, has a complex psychological value, as a useful resource, as a symbol of power and can satisfy basic psychological needs such as autonomy, competence and 8 relatedness. Money has a relative psychological value that is appreciated against a standard and not its absolute worth. Prospects Theory describes the usefulness of money in comparison to the amount of wealth that the final state produces, after gaining or losing money. Concretely, as an individual earns money, the same amount will be evaluated as more useful if his wealth is less and less useful if his wealth is greater, describing a concave function between axes of quantity and usefulness (Bijleveld & Aarts, 2014). Data sources in economic psychology include secondary data: “The focus of interest is naturally on what the human actors perceive, expect and value. Such subjective phenomena can be studied through inferences from environmental changes - which means using objective data as proxies for subjective phenomena - or through questioning or observing the actors concerned.”(Van Raaij, W. F. et al., 1988, p. 36). Organization-level studies comprising work practices and organizational performance often include financial measures, but the results are not significant, as the data are restricted to one sector of activity and are not very extensive over time (Cappelli & Neumark, 2013). Many are based on samples of convenience or have a cross-sectional design, which prevents the inference of causality and the generalization of the relationships found. To overcome the methodological problems of studies at the organizational level, the literature proposes to observe three principles: 1. Sample must be representative of the population of employers that you intend to study; 2. The oucome variables must include associate costs to its implementation and not only productivity; 3. Data and research design must make it possible to infer causality, including the variables in which companies may be different; assemble a panel data that allows addressing causality/heterogeneity (Cappelli & Neumark, 2013). In our work, the first two recommendations are satisfied: we include all portuguese organizations, from all sectors of activity, with more than 100 workers (registered in the national and official databases); for organizational performance, financial and economic measures that include the costs of work practices (such as EBITDA) were used. The third recommendation is partially satisfied: we set up a panel data that links the economic and financial performance (INE, 2020) to the work practices described in Quadros de Pessoal (MTSS, 2020) such as wages and we used control variables (e.g. sector and organization size) that the literature describes as having an impact on organizational performance, to address the problem 9 of heterogeneity; in relation to causality, we used reverse statistics to discover the most likely direction of the relationship between variables, time dummies and delta variables to obtain results closer to causality. However, as we do not have organizational performance data prior to the adoption of the work practices, the causal relationship cannot be reliably declared. A study carried out with longitudinal data from a United States of America national survey (Cappelli & Neumark, 2013) was performed on panel data and fixed effects analysis, as our work is, and shows the gains of work practices without neglecting the costs of those work practices. However, Cappelli and Neumark (2013) study has the advantage of including data on the moment before the adoption of the work practices, which our study does not guarantee – in our work the effects found may be underestimated and do not allow establishing a causal relationship, although make possible to establish an unequivocal relationship. We use archival data, combining employment and accounting figures, which has the advantage of allowing all organizations to be studied simultaneously, using longitudinal data (from 2010 to 2018) and not causing reactivity to participants at the time of collection. However, it has the disadvantage that nonexistent data cannot be added and the research design has to adapt to them (Furnham, 2005). On the following chapters we will present two studies: the first one works on the the effect on organizationa performance of the investment in human capital; the second one, on the relation of job insecurity ans organizational performance. In the end, we will discuss the theoretical frameworks found in literature to explain the relation between job insecurity and performance and we expect to contribut with a more compreensive model to frame the subject. References Angrave, D., Charlwood, A., Kirkpatrick, I., Lawrence, M., & Stuart, M. (2016). 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A Road Well Traveled: The Past, Present, and Future Journey of Strategic Human Resource Management. Annual Review of Organizational Psychology and Organizational Behavior , 4 , 45–65. https://doi.org/10.1146/annurev-orgpsych-032516-113052 20 Table 4 – Articles: Methodological Caracteristics Paper Human Capital Organizational Performance Scientific Approach Definition Measure Mesure (Dewi, Alhabsyi, Arifin, & Abdillah, 2019) The spirit on how company is managed by creating systems, procedure, mechanism, structure and organization process. Survey Survey Empirical (Onyekwelu, Uche, Okoh, Johnson, & Iyidiobi, 2017) Encompasses tacit and explicit knowledge of employees. It also includes employees‟ competencies and capabilities in terms of structuring and applying knowledge and skills to perform certain activities. Total salary and wages. ROA Empirical (Fareed, Noor, Isa, Shahzad, & Laeeq, 2016) Knowledge, skills, abilities and other characteristics (KSAOs) of individual employees. Traits an individual brings to the job, which are; intelligence, positive attitude, reliability and commitment, fulfilling work energy, ability to learn and imagination with creativity. Survey Survey Empirical (Hay, Ragab, & Hegazy, 2019) Group of employee knowledge, knowhow, innovation, competencies, creativity, skills, experiences, expertise of the entire employees of the company and managers, in addition to training, education and relations. HC Disclosure (Content Analysis) ROA Empirical (Ienciu, Ienciu, & Mihuo, 2016) Development, efficiency and stability. Theoretical (Kucharčíková & Mičiak, 2018) Represents the sum of abilities, skills, knowledge, experience and talent that people have at their disposal and that they use when performing the job tasks HC Metrics related to firm activities Case Study 21 leading to the fulfilment of enterprise’s goals. (Kucharčíková, Mičiak, & Hitka, 2018) It represents the sum of abilities, skills, knowledge, experience, and talent that people have at their disposal and that they use to perform the job tasks leading to the fulfilment of an enterprise’s objectives. HC Investment (HCROI, NPV, TIV, Payback Period, NPV) Case Study (Maley, 2019) A form of capital embedded in the knowledge and skills that people acquire through education and training and is a product of deliberate investment that yields returns. Behavioural competencies NPV, P&L, Cash Flow Empirical (Muscalu & Blaga, 2015) No definition Theoretical (Niculescu, 2016) Efficiency is defined as being “the ratio of outputs to inputs”, (2) quality is “the number of proportion of outputs that meet a quality standard”, and (3) effectiveness becomes “the ratio of outcomes to inputs”. Theoretical (Ofurum & Aliyu, 2018) Human ability for problem solving. HCEI calculated from Annual Report Renevue Growth, ROI Empirical (Ricci & Scafarto, 2015) The bundle of knowledge, attributes and capacities that can be learned by workers. Theoretical (Rompho, 2017) Is composed of organizational members internal assets. Employee related costs/Number of Employees, Survey Price-to-book ratio, ROE Empirical (Rzepka, 2017) Human capital consists of competence, skills, experience and applied approaches in management practice. Survey Survey Empirical 22 (Rzepka, Szara, Sowa, & Slusarczyk, 2017) Is indispensably linked to a human being, and it includes knowledge, skills, experience and competence of employees. Human capital is defined as the ability of an employee to perform tasks, solve problems emerging in the company, but it is also the ability to create relationships which are based on understanding and trust. Survey Survey Empirical (Soubjaki, 2017) Knowledge, skills and innovations that the employees or persons in an organization bring on board. Theoretical (Thuda, Sari, & Maharani, 2019) No definition Survey Survey Empirical (Venkatesh, 2017) No definition Theoretical (Miranda & Guerreiro, 2017) The capacity, experience and knowledge of people Goodwill GVA Empirical The articles obtained by systematic literature review can conclude that, in the last 5 years, the definition of Human Capital shows a wide scope, which can be described as: • a construct that encompasses all behaviour that has current and potential value to achieve organization’s economic goals. This includes Knowledge, skills, abilities and other characteristics, such as personality traits, intelligence, positive attitude, reliability and commitment, fulfilling work energy, ability to learn and imagination with creativity. Direct observation measures for Human Capital (survey, content analysis, behavioural competences) and indirect for Organizational Performance predominate (ROA, ROI, ROE, GVA). Human Capital is also measured directly by staff expenses or other indexes based on the annual report, and Organizational Performance is also measured through a survey. As the objective of this contribution is to test the predictive capacity of the investment in human capital (IHC) in the organizational performance (OP) and the moderating effect of the context (firm life cycle – STAGE), we have chosen annual report staff expenses as independent variable, and firm life cycle as an explanatory variable (STAGE). 2 – The Theory of Human Capital and Human Resources Management 23 The Theory of Human Capital, which explains the relationship between investment and performance, begins with the works of Mincer, Friedman, Shultz and Rosen, at the University of Chicago (G. Becker, 1994), in response to the observation of income inequality between workers. Education, the most important investment in human capital (G. Becker, 1994) operated a growing and differentiating trend in wages, especially when comparing incomes of high educated workers with those who had only attended high school level education. Training, both formal and informal, also resulted in the same effect on the value of wages, not only when workers remained in the same company but also when they changed employers (G. Becker, 1994). It is understood, therefore, that the Theory of Human Capital is based on the rise of wages as a consequence of the increase of knowledge, through formal education and training, and that this investment is similar to investing in another type of capital, generating wealth for the worker and the employer. A study by Edward Denison of 1985 (G. Becker, 1994) analysed the increase in schooling of Americans between 1929 and 1982 and concluded that a quarter of the economic growth per capita was due precisely to this cause. The distribution of labour income in the model proposed by Mincer (Mincer, 1970) takes into account the length of schooling which, by increasing worker productivity, provides, after an initial investment, a timedelayed return on labour income (Portela, 2007). Schultz, a Nobel laureate in economics for his work on human capital, is perhaps the most visible face of this revolution in economic thinking, which has put investment in HC at the centre of modern economy (T. W. Schultz, 1989). This concept of human capital as the result of the accumulation of knowledge, skills and attitudes in a human being, of which he is the sole possessor (Huffman, 2009), takes several investors to intervene in the formation of this capital, including the family and the country. In Schultz's words, "Thus, investment in the human capital can be classified into investment in (1) schooling and higher education, (2) post-school training and learning, (3) preschool learning activities, (4) migration, (5) health, (6) information, and (7) investment in children (population). " (T. W. Schultz, 1972, p. 4). Schultz emphasized the concept of capital from the beginning (T. W. Schultz, 1972), refocusing it on knowledge and specialization (T. W. Schultz, 1989), and away from the concept of workforce and human resources. At the same time, he summarizes several lessons learned from the work of other researchers, namely that human capital increases labour productivity and economic capital and that people are more productive in a high human capital environment than in a low human capital environment, a situation unparalleled in economic capital (Schultz, 1989). That is, people who work with others whose knowledge 24 is high (high human capital) perform better than in a context of lower human capital (less knowledged people). In other words, human capital embodies the knowledge, talent and experience of employees (Bontis & Fitz‐enz, 2002), describes the aggregation of individuals within the firm (Wright, Coff, & Moliterno, 2014) and builds a unit-level resource that is created from the emergence of individuals' knowledge, skills, abilities and other characteristics (Ployhart & Moliterno, 2011). Investment in human capital comprises three measures: development ratio, investment in training and cost of training (Bontis & Fitz‐enz, 2002), the first being defined by the proportion of workers involved, the second by the amount of money spent in training per employee and the third represents the expenditure for each worker. However, Human Resources Management (HRM), which involves systems deployed to recruit, select, remunerate and engage employees (Wright et al., 2014), as well as other initiatives to drive attitudes and desired behaviours (Boon et al., 2017), has been the instrument to enhance the value of human capital and make this resource inimitable and irreplaceable in generating competitive advantages in the company (Barney, Ketchen, & Wright, 2011; Shaw, Park, & Kim, 2013). Furthermore, there is empirical evidence that HRM expenditures produce higher productivity (Bassey, Bassey Eyo., Tapang, 2012; Jackson et al., 2014) and better financial results (Huselid et al., 1997; Jackson et al., 2014). The fact that the investment in HC appeared in the literature on human capital as mostly restricted to the amounts spent in education and training rose some doubts towards researchers that we follow (Flamholtz & Lacey, 1981; Jackson & Schuler, 1995) and discuss further: 1. Since human capital is a concept that encompasses everything an employee takes from the company when he or she leaves, that is, their knowledge, talent and experience (Bontis & Fitz‐ enz, 2002), is it legitimate to assume that hiring, motivating and retaining human capital is also investment in human capital; 2. Hiring employees with greater knowledge, talent or experience is, as we know, more expensive than hiring them with lower levels of development, because their market value will be higher. In doing so, we consider that the company is investing in human capital already formed, anticipating the investment in its training, but also avoiding waiting for the time needed to realize its full productivity potential; 25 3. On the other hand, the cost of recruitment services to attract and select the best talent or the most adaptable to the specific tasks they are intended to deliver, is a cost to acquire employees who need less investment in training, since they already receive them more developed, and to prevent acquisition errors that can have an impact on productivity; 4. Finally, expenditures on talent retention programs, team building and all those that are designed to build or develop affective ties with the team or company are a way to avoid the depletion of human capital and consequent need to reinvest in training. We therefore argue that the investment in HC involves all the amounts spent on, or in favour of the employees, since they are destined to invest in the acquisition, development and retention of human capital, or to prevent new investment from becoming necessary, as a consequence of the depletion of human capital caused by demotivation, discomfort, dissatisfaction or turnover. On the other hand, the amounts entered in the official accounts give us an approximate indication of their market price and a guarantee of stability of value, along the lines suggested by Stein: “This performance potential of a company therefore consists at least of the existing employees, priced with market salaries, of their equipment with up-to-date knowledge as well as of their motivational situation which is mainly influenced by HRM” (Stein, 2007, p. 306). In recent years the popularization of the concept of human capital has turned it more comprehensive. For example, Yildiz, (Yildiz, 2018) includes in the concept of human capital the attitudes or even the organizational climate and lists 44 indicators among the most used. Following the latest literature, we consider that investment in human capital involves all the amounts spent with the team. This is also supported by other studies we presented above that consider all staff expenses as investment in human capital (Kucharčíková et al., 2018; Ofurum & Aliyu, 2018; Onyekwelu et al., 2017; Rompho, 2017). 3 – Organizational Performance According to one of the most prominent theory of management, the Resource Based View (RBV), an organization's ability to outpace its competitors lies in the holding of unique and inimitable resources that give it an advantage in the specific market in which it operates. One such resource is Human Capital (K. Jiang, Takeuchi, & Lepak, 2013). 26 In the literature, it is agreed that investment in training has a positive impact on organizational performance. However, financial performance is not always consistent with this assumption, due to the influence of many variables (Aragon & Valle, 2013) and the fact that it is subject to appropriation of the profits created by human capital holders or their managers (Crook, Todd, Combs, Woehr, & Ketchen, 2011). Nevertheless, Huselid, Aragon and Valle concluded that the increase on HC influences the company's financial performance (Aragon & Valle, 2013; Huselid, 1995b). Two meta-analyses found a relationship between human capital and company performance: Newbert, that analysed 33 papers, where 33% showed a relation between human capital and performance (Newbert, 2008); Crook, working on 66 studies, found a strong relationship between human capital and organizational performance mediated by operational performance (Crook et al., 2011). McCarthy and Sheehan studied HRD expenditures in a number of countries following the post-2008 financial crisis and concluded that there was an evident decrease in the amount spent / invested in the function, followed by a decrease in complexity (McCarthy & Sheehan, 2014). The authors argue that divestment in HRD undermines organizational sustainability and may result from the prioritization of a short-term financial performance strategy. Jackson and Schuler had already warned that the merging of HRM practices with the strategy chosen for the company is critical to success (Schuler & Jackson, 1987). Hypothesis 1: Investing in HC is positively related to OP of the company. 4 – The Context – Life-Cycle Stage The relationship between HC and OP can be influenced by the context in which employees behave. Working at a start-up is not the same as working at a company with solid experience and profit. Working in an endangered company will also be different. Once we used an analysis at the organizational level, we decided to explore the situational context, in an attempt to better understand the phenomenon. The context provides several variables that can determine or moderate organizational behaviour (Clitheroe, Stokols, & Zmuidzinas, 1998; Gomes et al., 2015) and influence emotions and attitudes (Valdivia & Mart, 2020), with an impact on the conclusions of an investigation (Johns, 2006). In this article, we will explore a context variable that can be calculated from the databases we use: firm life cycle stage. 27 Life Cycle Theory (LCT) is based on the premise that an organization is similar to a living being, which goes through different stages of development, between birth and death (Liu & Chou, 2016). Generally, five stages are defined - Introduction, Growth, Mature, Shake Out and Decline - (Dickinson, 2011; Habib & Hasan, 2017; Jackson & Schuler, 1995; Yan & Zhao, 2010), and their evaluation has lately been based on a descriptive composition of four items (annual dividends scaled by income, percentage of sales growth, capital expenditure as a proportion of a firm’s value, and the age of the firm) (Liu & Chou, 2016), or in the pattern of net cash flow (Dickinson, 2011; Habib & Hasan, 2017), which we adopt. The organizational environment where the behaviours of employees and managers are carried out is characterized by higher profitability in STAGES 2, 3 and 5 (especially in stage 3), and lower in STAGES 1 and 4. In STAGES 1 and 2, investment is high and in STAGE 5 the companies sell assets to pay debts. Debt is higher in STAGES 1 and 2, following investment, and decreases in STAGE 3. In this phase, companies distribute more dividends to shareholders or invest in unprofitable projects, to decrease profits and lower taxes (Dickinson, 2011). The lowest risk of insolvency is found in STAGE 3 (Domingo Terreno, Sattler, & Pérez, 2017) and the remuneration of CEO's has higher fixed values in STAGES 3 and 5, while in STAGES 1 and 2 pay-forperformance predominates (Liu & Chou, 2016). Hypothesis 2: The stage of the company's life cycle predicts the relationship between the Investment in HC and Organizational Performance. Method Companies operating in Portugal present their annual report based on the current regulation for the European Union, denominated Sistema de Normalização de Contas (SNC) (Guerreiro, Rodrigues, & Craig, 2014), since 2010. These reports are gathered in a database named SCIE (Sistema de Contas Integradas das Empresas) (INE, 2020). Although the temporal spectrum covered by the database is much wider, the codes have undergone a profound change, which makes it difficult to harmonize statistical production. Since 2010, the accounting system used has remained constant. We started our sample in 2011 and finished in the last available year, 2016. 28 Accessing this database allowed the development of a 6-year longitudinal study and an approach at the organization level. The variables we needed to work on, like the variable of interest (OP) and the explanatory variable (IHC), are directly accessible in the database, as well as the control variables (SECTOR and SIZE). Dummy variable STAGE was calculated from the data in the annual report, according to the model we followed (Dickinson, 2011). 1 – Sample The companies operating in Portugal present their balance sheet based on the International Financial Standards (IFRS), called the Sistema de Normalização de Contas (SNC) (Guerreiro et al., 2014). The company's official balance is produced according to the classification’s rules included in the SNC. Official balances prior to 2010 are difficult to compare as a purely national classification model was used. The database we used for our study includes a vast set of annual information for statistical, fiscal and accountability purposes. Business identities are unavailable in the database. From the database, which includes all the companies operating in Portugal in the private sector, we selected companies with 100 or more employees, where we believed we could better identify the phenomenon under study and where labour economic researchers usually make the cut-off point to distinguish large firms from small firms (Centeno & Novo, 2012; Winter-Ebmer & Cardoso, 2010). Of these, we considered only the companies that remained active throughout the considered period (20102016). We obtained 1566 companies, which composed our sample. The companies included are distributed by the relevant variables (STAGE, SIZE and SECTOR) as summarized in Table 5: Table 5 – Variables Description STAGE 2011 2012 2013 2014 2015 2016 1. Introduction 601 571 546 515 492 453 2. Growth 264 211 249 293 276 346 3. Mature 130 165 169 189 246 213 4. Decline 82 112 97 88 98 92 5. Shake Out 489 507 505 481 454 462 SIZE 2011 2012 2013 2014 2015 2016 1 941 951 958 924 904 878 2 368 361 353 370 373 386 3 109 100 101 116 123 132 29 4 42 42 42 37 49 47 5 92 100 100 108 104 108 SECTOR 2011 2012 2013 2014 2015 2016 Food, beverages and tobacco 106 107 106 108 109 110 Textiles, dressing, leather 183 184 184 183 183 181 Wood, cork, paper, no furniture 52 52 53 53 52 52 Manufacture of non-metallic products 119 118 117 117 116 116 Manufacture of metals products 176 173 177 177 175 176 Manufacturing of furniture, and manuf. 27 27 27 27 27 27 Electricity, gas 21 21 21 21 22 22 Construction 85 83 81 82 81 80 Wholesale and retail trade; repair of veic., motorcycles 247 249 246 246 249 250 Hotels and restaurants 79 82 82 82 82 82 Transport, storage, and communications 106 105 105 106 106 107 Post and telecommunications 9 9 9 9 9 9 Real estate, renting and business active 224 225 224 223 225 224 Education 27 26 26 27 27 27 Health and social work 35 35 36 36 36 36 Other community, social and personal service activities 51 51 51 50 48 48 Residual 19 19 21 19 19 19 1566 1566 1566 1566 1566 1 566 Note: Size variable was obtained dividing the sample in 5 quintiles (Source: own computations using SCIE) 2 – Variables Independent Variable: Investment in Human Capital (IHC) The official balance accounts of the companies reflect the decisions of the managers who have the power to act on their behalf and is a reliable source of the options taken in the exercise of an annual activity. Through them, it is possible to observe the nature of the expenses that were favoured and disfavoured, that is to say, as financial resources are finite, we can know the priorities that managers have followed, just by comparing the amounts they reserved for each type of expenses. The literature recognizes that personnel expenses are a good measure of investment in human capital including the literature collected in our systematic review (Bontis & Fitz‐enz, 2002; Firer & Mitchell Williams, 2003; Fitz-enz, 2009; Kucharčíková & Mičiak, 2018; Ofurum & Aliyu, 2018; Onyekwelu et al., 2017; Rompho, 2017; Stein, 2007), although other measures coexist in the literature, both from the same Resource Based View perspective as from the Market Based View perspective (Stein, 2007). 36 When considering equation 3 (OPt = f (IHCt-1)), the model fit is lower, probably showing that, as time passes, other variables we haven’t consider have gained strength. Considering that the model contains categorical variables, SIZE, SECTOR and STAGE, and a large number of observations, 𝑅2 is comparable to the one presented in the literature. The effect of IHC on OP shows that a rise of 1% in IHC, in one year, produces an increase of 0,49% on NS, 0,63% on GVA and 0,37% on EBITDA, of the same year. If the rise is consistent in the course of two years NS can rise 0,51%, GVA 0,65% and EBITDA maintains a value of 0,37%. When considering equation 3 (OPt = f (IHCt-1)), the effect fades away (0,15% for NS, 0,13% for GVA and 0,12% for EBITDA), which means that investing in HC is effective to leverage performance immediately and not later, as we thought. Table 8 – Regression Results NS GVA EBITDA OPt = f (IHCt) OPt = f (IHCt + ∆IHCt-1) OPt = f (IHCt1) OPt = f (IHCt) OPt = f (IHCt + ∆IHCt-1) OPt = f (IHCt-1) OPt = f (IHCt) OPt = f (IHCt + ∆IHCt-1) OPt = f (IHCt1) 0,49*** 0,51*** 0,15*** 0,63*** 0,65*** 0,13*** 0,37*** 0,37*** 0,12** Error (0,05) (0,06) (0,04) (0,06) (0,05) (0,04) (0,06) (0,07) (0,06) R2 0,39 0,36 0,20 0,35 0,31 0,17 0,17 0,17 0,15 RMSE 0,15 0,14 0,13 0,20 0,19 0,18 0,48 0,45 0,42 N 9 395 7 828 6 261 9 320 7 766 6 215 8 600 7 164 5 776 ROA ROE ROS OPt = f (IHCt) OPt = f (IHCt + ∆IHCt-1) OPt = f (IHCt1) OPt = f (IHCt) OPt = f (IHCt + ∆IHCt-1) OPt = f (IHCt-1) OPt = f (IHCt) OPt = f (IHCt + ∆IHCt-1) OPt = f (IHCt1) -0,03* -0,03* -0,03* -291,41 -432,67 190,73 -0,007 -0,004 0,00 Error (0,02) (0,009) (0,01) (291,60) (431,47) (187,46) (0,01) (0,01) (0,01) R2 0,12 0,11 0,10 0,00 0,00 0,00 0,09 0,09 0,08 RMSE 0,07 0,07 0,06 2 815,24 3 083,28 2 446,39 0,07 0,06 0,06 N 9 395 7 828 6 261 9 395 7 828 6 261 9 395 7 828 6 261 37 The header shows Equations 1, 2 and 3, modelled in function of OP. The results show the effect on NS, GVA, EBITDA, ROA, ROE and ROS. Significance levels: 1%, ***, 5%, **, 10%, * (Source: own computations using SCIE) In addition, we calculated the inverse regression in Table 9, that is, we modelled the IHC in function of the organizational performance (OP) (see Equations 4 and 5), to explore the possibility of our results being due to a mere conjuncture of financial resources abundance. We have verified that organizational performance modelling based on IHC produces more expressive results than its opposite, which reinforces the evidence that a causal relation between IHC and OP is more likely than between OP and IHC. This is the case for GVA and EBITDA, but not for NS. NS maintains equivalent effect for both models, GVA and EBITDA show a high difference, suggesting that these two OP measures are more able to capture the effect of the investment in HC that we seek to understand. Table 9 – Reverse Regression Results NS OP = f (IHC) IHC = f (OP) OPt = f (IHCt) OPt = f (IHCt + ∆IHCt-1) OPt = f (IHCt-1) IHCt = f (OPt) IHCt = f (IHCt + ∆OPt-1) IHCt = f (OPt-1) 0,49*** 0,51*** 0,15*** 0,48*** 0,50*** 0,25*** Error (0,05) (0,06) (0,04) (0,03) (0,03) (0,03) R2 0,39 0,36 0,20 0,42 0,39 0,28 RMSE 0,15 0,14 0,13 0,15 0,13 0,12 N 9 395 7 828 6 261 9 395 7 828 6 261 GVA OP = f (IHC) IHC = f (OP) OPt = f (IHCt) OPt = f (IHCt + ∆IHCt-1) OPt = f (IHCt-1) IHCt = f (OPt) IHCt = f (IHCt + ∆OPt-1) IHCt = f (OPt-1) 0,63*** 0,65*** 0,13*** 0,33*** 0,37*** 0,15*** Error (0,06) (0,05) (0,04) (0,03) (0,03) (0,03) R2 0,35 0,31 0,17 0,40 0,37 0,26 RMSE 0,20 0,19 0,18 0,15 0,13 0,12 N 9 320 7 766 6 215 9 320 7 743 6 190 EBITDA OP = f (IHC) IHC = f (OP) OPt = f (IHCt) OPt = f (IHCt + ∆IHCt-1) OPt = f (IHCt-1) IHCt = f (OPt) IHCt = f (IHCt + ∆OPt-1) IHCt = f (OPt-1) 0,37*** 0,37*** 0,12** 0,04*** 0,06*** 0,05*** Error (0,06) (0,07) (0,06) (0,01) (0,01) (0,01) R2 0,17 0,17 0,15 0,26 0,26 0,26 38 RMSE 0,48 0,45 0,42 0,16 0,14 0,11 N 8 600 7 164 5 776 8 600 6 828 5 439 The header shows Equations 1, 2 and 3, modelled in function of IHC or OP. The results show the effect on NS, GVA and EBITDA. Significance levels: 1%, ***, 5%, **, 10%, * (Source: own computations using SCIE) The regression with the same variables for the sample of each STAGE (Table 10) demonstrates that EBITDA has a very poor overall fit, ranging between 0,05 and 0,14 for 𝑅2, on STAGES 1 and 2. For STAGES 3 and 4, the results are not significant. Table 10 – Results by STAGE STAGE 1 GVAt = f (IHCt) GVAt = f (IHCt + ∆IHCt-1) EBITDAt = f (IHCt) EBITDAt = f (IHCt + ∆IHCt1) 0,52*** 0,52*** 0,43*** 0,38*** Error (0,11) (0,10) (0,13) (0,14) R2 0,22 0,19 0,05 0,05 RMSE 0,19 0,18 0,46 0,41 N 3 144 2 546 2 758 2 229 STAGE 2 GVAt = f (IHCt) GVAt = f (IHCt + ∆IHCt-1) EBITDAt = f (IHCt) EBITDAt = f (IHCt + ∆IHCt1) 0,52*** 0,78*** 0,37*** 0,68*** Error (0,11) (0,08) (0,12) (0,13) R2 0,44 0,55 0,09 0,14 RMSE 0,11 0,09 0,25 0,22 N 1 636 1 373 1 637 1 373 STAGE 3 GVAt = f (IHCt) GVAt = f (IHCt + ∆IHCt-1) EBITDAt = f (IHCt) EBITDAt = f (IHCt + ∆IHCt1) 0,39*** 0,47*** 0,31** 0,33** Error (0,11) (0,10) (0,13) (0,16) R2 0,42 0,41 0,19 0,18 RMSE 0,10 0,09 0,20 0,18 N 1 110 980 1 109 979 STAGE 4 39 GVAt = f (IHCt) GVAt = f (IHCt + ∆IHCt-1) EBITDAt = f (IHCt) EBITDAt = f (IHCt + ∆IHCt1) 0,98*** 0,84*** 0,64 -0,04 Error (0,29) (0,23) (0,58) (1,43) R2 0,21 0,21 0,11 0,13 RMSE 0,16 0,13 0,23 0,23 N 562 481 436 369 The header shows Equations 1 and 2 modelled in function of OP. Results show effect on GVA and EBITDA, in each STAGE. Significance levels: 1%, ***, 5%, **, 10%, * (Source: own computations using SCIE) We tested the variables NS, GVA, EBITDA, ROA, ROE and ROS for OP measurements. We verified that: 1. ROA, ROE and ROS produce non-significant results in our model; 2. NS, when modelled as a function of IHC, or when used as response variable, produces an identical effect. This fact does not allow us to draw any conclusions about causality in the relationship between performance and investment in HC; 3. EBITDA produces significant results in STAGE 1, marginally significant in STAGE 2 and not significant in STAGE 3 and 4. The explanatory capacity of the model is low and the Error high (STAGE 4); 4. GVA is the only response variable that maintains consistency in the tests we performed: it produces different results when modelled as response variable or as explanatory variable, returns positive and significant results, behaves differently in STAGE modelling samples and shows an acceptable overall fit. The objective of this paper was to test the predictive capacity of the investment in human capital (IHC), in the organizational performance (OP). To achieve this, we have worked with annual report staff expenses as independent variable and economic results of companies as dependent variable. To test the possibility of a situational variable moderating this relationship between IHC and OP, we have used the firm life cycle stage as a dummy variable (STAGE). At the same time, it was intended to use only open access data, which did not require an increased effort to obtain it, thereby strengthening the diagnostic and intervention capacity of human resource managers. The analysis of the literature that combines these objectives allows us to assert with some confidence that: 40 1. Human Capital is a construct that encompasses all behaviour that has current and potential value to achieve organization’s economic goals. This includes knowledge, skills, abilities and other characteristics (KSAOs) of individual employees. Traits an individual brings to the job, such as intelligence, positive attitude, reliability and commitment, fulfilling work energy, ability to learn and imagination with creativity. 2. The Human Capital Theory establishes that the investment in HC is capable of producing financial return for the investor, although it differs from other investments because the capital remains in the possession of the employee and depends on the action of the latter to be put to the service of the employer (Aragon & Valle, 2013; Crook et al., 2011; Huffman, 2009; Newbert, 2008). 3. The concept of investment was formerly limited to education, training, health and experience (Schultz, 1972). Afterwards, it was extended to an HRM result and valued as an inimitable resource (Barney et al., 2011; Boon et al., 2017; Shaw et al., 2013; Wright et al., 2014) and nowadays contains indicators such as the organizational climate (Yildiz, 2018). We argue that keeping the concept true to its definition should extend the investment on it to all the amounts spent on employees registered on the balance sheet, following recent literature (Kucharčíková et al., 2018; Ofurum & Aliyu, 2018; Onyekwelu et al., 2017; Rompho, 2017). 4. HRM expenditures produce higher productivity (Bassey, Bassey Eyo., Tapang, 2012; Jackson et al., 2014; Van De Voorde & Beijer, 2015) and better financial results (Huselid et al., 1997; Jackson et al., 2014). From the analyses carried out on the balance sheets of Portuguese firms with more than 100 employees, in the years 2010-2016, we summarize our results: 1. The costs/investments registered in staff expenses, for Portuguese companies with more than 100 employees, which we have designated as investment in human capital (IHC), have the potential to predict the variation of company's performance, measured in Gross Value Added (GVA). NS turned out to be inconsistent in revealing causality, as it performs equal effect magnitude as an explanatory variable or as a response variable. This is consistent with economic researchers that use GVA, arguing that it is more reliable than profits because of firms discretionary power on reporting them in balance sheets (Guiso et al., 2016, p. 1065). Our results with financial indicators (EBITDA, ROA, ROE and ROS) match the authors’ alert for the low success rate with these type of variables (Boon et al., 2017; Dalton & Daily, 1998). 41 2. The hypothesis of OP explaining IHC variation was tested, revealing a less significant impact than the opposite regression. It is confirmed, therefore, that the availability of financial means induces investment in HC, but the explanation of the variation of OP through IHC suggests a causal relationship. 3. The relevance of the context (life cycle Stage) is confirmed in our results and reaches its maximum in STAGE 4 – Decline. At this stage, the 1% increase in investment results in a 0.98% gain in GVA, in the same year. We hypothesize that this result is due to the attribution of meaning to the behaviour of the company that, having an argument not to do it from an adverse context, decides to invest in human capital. Discussion Our results for Portuguese companies confirm that investment in human capital affects the company's performance and is consistent with the literature (Bontis & Fitz‐enz, 2002; Dewi et al., 2019; Ofurum & Aliyu, 2018; Phusavat, Comepa, Sitko-Lutek, & Ooi, 2011; Shaw et al., 2013). We hypothesise that organizational performance derives from employees’ perceptions that lead to employees' reactions (Van de Voorde & Boxall, 2014). In other words, if HRM practices are perceived as intended to improve workers' well-being, this may trigger reciprocity and model employee behaviour, according to the Social Exchange Theory (SET) (Van De Voorde & Beijer, 2015). However, the research still seeks to answer the 'why' of the influence of HR practices on performance, which was conventionally called 'black box'. An invaluable contribution was made by Nishii and colleagues (Nishii et al., 2008), with an empirical work concluding that employees elaborate attributions about HR practices and that these attributions originate attitudes and shape performance. In a working group, if attributions on each of the HR practices are different, then attitudes and performances will also be different (Nishii et al., 2008). Hewett (Hewett, Shantz, Mundy, & Alfes, 2017), also looking for answers to the ‘black box’ between HRM and performance, identified two currents of thought, HR System Strength (Bowen & Ostroff, 2004) and HR Attribution (Nishii et al., 2008); although evolved autonomously, both are based on the Attribution Theory, which means that researchers tend to agree on the implication of it to explain the ‘black box’. The attribution of meaning to the employer behaviour of spending/investing more or less with employees could be a possible explanation, requiring further investigation, as our results suggest. As we obtained a positive and significant relation when regressing our model by each stage of the life-cycle, using GVA, and 42 the greatest impact occurs in Stage 4 – Decline, reinforces this possibility. This follows the conclusions of several authors that point out attitudinal variables in the relationship between HRM and performance (Messersmith, Patel, Lepak, & Gould-Williams, 2011; Nishii et al., 2008; Van de Voorde & Boxall, 2014; Veloso, 2007). Limitations of this Work and Implications for Future Research This study included only companies with more than 100 employees operating in Portugal, so their conclusions cannot directly apply to smaller companies or other countries where culture, labour or tax legislation, among other constraints, can determine different employer or employee behaviour. The period considered takes place exclusively in the post-crisis period of 2008, so it cannot be generalized directly to previous moments, without studying the behaviours revealed by the data. The fact that this time period shows that more investment in human capital produces better organizational performance may derive from a behaviour change induced by the experience of the recent crisis and not from an effect consistent with any context outside the organization. In the systematic review of the literature, the selection of the 3 main articles determines the literature found with the method of Webster and Watson. 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C., & Guest, D. E. (2020). The case for psychology in human resource management research. Human Resource Management Journal , 30 (1), 34–48. https://doi.org/10.1111/17488583.12237 68 A downsizing practice in the organization or in the worker's personal history has a strong relationship with the perception of job insecurity (Gallie et al., 2017; Kinnunen, Mauno, Nätti, & Happonen, 2000; Rosenblatt & Greenhalgh, 1984), which shows the importance of the context in the worker's assessment of the danger of job loss. Older employees (over 40 years old), with less seniority in the job and less education are more concerned about job maintenance (Erlinghagen, 2008), their employability (Silva, Veloso, & Soares Silva, 2017) and employees with more routine roles are more insecure about maintaining job status (Gallie et al., 2017; Mau et al., 2012). Technologically more advanced companies also have workers more concerned with keeping their jobs, because they fear being replaced by technology (Gallie et al., 2017). In a study that included 17 European countries, Portugal appears in 8th place for the perception of Job Insecurity, in 2004 (Erlinghagen, 2008) and in 5th place, in a total of 19 countries, in 2010 (Lübke & Erlinghagen, 2014). In 2012, in the midst of the economic crisis and with intervention by external authorities, among 19 countries in Europe, 31% of portuguese respondents reported fear of losing their job and 44% said they fear not having the financial means to cover domestic expenses (Mau et al., 2012). Perception of Job Insecurity remain relatively stable over time for layoff survivors (Hellgren et al., 1999; Kinnunen et al., 2000), like a traumatic event. This mechanism is considered adaptive and protects the individual and his group from future loss of resources (Hobfoll, 2001). 3 - Consequences of Job Insecurity – Organizational Performance Job Insecurity is stressful because it decreases the experience of control (Elst, De Cuyper, & De Witte, 2011), results in psychological contract breach (Vander Elst et al., 2016) and corresponds to a threat on valuable resources (Hobfoll, Halbesleben, Neveu, & Westman, 2018). Job insecurity negatively affects mental and phisycal health (Hellgren et al., 1999; Sverke et al., 2002), well-being (Ogbonnaya, Gahan, & Eib, 2019; Selenko, Mäkikangas, & Stride, 2017; Silla, de Cuyper, Gracia, Peiró, & de Witte, 2009; Van Dick, Ullrich, & Tissington, 2006), social identity (Selenko et al., 2017) and is related to financial stress (Choi, Heo, Cho, & Lee, 2020). Consequences on attitudes include decreased job satisfaction (De Cuyper & De Witte, 2006, 2007; De Witte & Näswall, 2003; Hellgren et al., 1999; Sverke et al., 2002; Van Dick et al., 2006), increased turnover intention, decreased job involvement and organizational commitment, decreased trust (Sverke et al., 2002) and motivation (De Witte & Näswall, 2003; Suifan, 2019). 69 A peculiarity of Job Insecurity effects is that these effects remain relatively stable over time, for layoff survivors, even when they no longer report high job insecurity values (Hellgren et al., 1999). Job Insecurity has a negative impact on performance (Sverke et al., 2002; Sverke, Låstad, Hellgren, Richter, & Näswall, 2019), mesured by scale (Chirumbolo, Callea, & Urbini, 2020; Darvishmotevali & Ali, 2020; Gallie et al., 2017; Niesen, Van Hootegem, Handaja, Battistelli, & De Witte, 2018; Piccoli, De Witte, & Reisel, 2017; Probst, Jiang, & López Bohle, 2019; Selenko et al., 2017; Tentama & Rosandy, 2019; D. Wang et al., 2020; H. J. Wang, Lu, & Siu, 2015), self-rated (De Cuyper & De Witte, 2006, 2007; Rosenblatt, Talmud, & Ruvio, 1999) or rated by supervisor (H. J. Wang et al., 2015). Other aspects of performance are also hampered by JI as innovation (Niesen et al., 2018) and organizational citizenship behaviors (Probst, Gailey, Jiang, & Bohle, 2017; Van Dick et al., 2006). Counterproductive work behaviour is enhanced by JI (Shoss, 2017) as well as turnover (Richter, Vander Elst, & De Witte, 2020) and turnover intentions (Elst et al., 2011). The effect of Job Insecurity on performance is not linear, a U-line can be observed, respectively for low, moderate and high levels of Job Insecurity (Probst et al., 2017; Selenko et al., 2017). According to Social Exchange Theory (SET) (Blau, 1964), the principle of reciprocity encourages an obligation to return to others identical behaviour to that received. In this sense, a moderate Job Insecurity index will correspond to a lower performance than a low index. However, when a high Job Insecurity index corresponds to a high level of performance, it cannot be explained in the light of SET; the authors interpret it as an effect of the performance of employees who decided to stay in the organization (Probst et al., 2017; Selenko et al., 2017), although perhaps it needs further deepening. In an organization, the dissemination of job stress or psychological strain is explained by an interpersonal process called crossover that affects other people in the same social environment. At crossover there is a transmission of psychological states, resources and experiences between pairs of individuals, teams and organizations (Hobfoll et al., 2018). This process is also applied to job insecurity, since it is a major source of stress (Vander Elst et al., 2016). In this work, we intend to verify if Job Insecurity context has an impact on Organizational Performance (OP); this expectation is based on the crossover dissemination of the stress caused by the JI situation and on the coping strategy with the stressor, characterized by psychological withdrawal and deviation of resources towards the regulation of emotions (Hobfoll, 2001). Hypothesis 1: JI is negatively related to OP. 70 4Mecanisms Underlying Job Insecurity and Its Consequences Previous studies report the negative effects of job insecurity (Cheng & Chan, 2008; Sverke et al., 2002, 2019), but the mechanism by which Job insecurity influences well-being, behaviors and attitudes of employees remains to be determined. The proposals present in the literature include perceived control and psychological contract breach (De Cuyper & De Witte, 2007; Elst et al., 2011; Vander Elst et al., 2016), organizational trust (Richter & Näswall, 2019), rumination (Richter et al., 2020), job satisfaction (Shoss, Brummel, Probst, & Jiang, 2020), social identity (Selenko et al., 2017) and psychological capital (Probst et al., 2017). Psychological Contract Breach was found to mediate the relation between Job Insecurity and job satisfaction, and partially mediate the relationship between organizational commitment, life satisfaction (De Cuyper & De Witte, 2007), self-rated performance (Vander Elst et al., 2016) and innovative work behaviour (Niesen et al., 2018; Vander Elst et al., 2016). Perceived Control was found to partially mediate the relationship betwen Job Insecurity and job satisfaction, organizational commitment, psychological distress and turnover intentions (Elst et al., 2011), self-rated performance and innovative work behaviour (Vander Elst et al., 2016). However, since the mediations of perceived control and psychological contract breach are only partial, it is possible to find other mediating variables, which have already been proposed like unpredictability of the stressor and frustration of important functions fulfilled by work (De Witte, 2005). Literature also confirms the partial mediation between JI and job satisfaction and mental health variables, through the decrease of organizational trust (Richter & Näswall, 2019). This line of investigation follows the Conservation Of Resources Theory (COR) (Hobfoll, 2001; Hobfoll et al., 2018) and Appraisal Theory (Lazarus & Folkman, 1984) to explain the consequences of Job Insecurity on negative outcome; specifically, the struggle for the acquisition and conservation of resources generates negative outputs due to greater loss salience (COR Theory) or when it exceeds its own capabilities (Appraisal Theory), generating stress, strain, withdrawal and burnout (Taris, Schreurs, & Van Iersel-Van Silfhout, 2001). JI also influences another aspect of performance, counterproductive work behavior , through job satisfaction (Shoss et al., 2020). It is curious to see that Job Insecurity, when there is a low level of organizational justice , is negatively related to job performance, but if the level of organizational justice is high, they are not related (H. J. Wang et al., 2015). The negative relationship of job insecurity with job performance is mediated by work engagement , when organizational justice is low. 71 From a dispositional perspective, psychological capital , consisted of relationships of hope, self-efficacy, resilience, and optimism moderates the relation between job insecurity and performance (Probst et al., 2017). It is uncertain whether Job Insecurity is related to psychological contract breach , as the same effect was found on job satisfaction, life satisfaction, organizational commitment and self-rated performance for permanent and temporary employees (De Cuyper & De Witte, 2006), but more negative effects on wellbeing were found for permanent workers than non-permanent workers (Ogbonnaya et al., 2019). Social protection as a moderator provided evidence of less negative reaction to job insecurity in terms of task performance, counterproductive work behaviours and much less in safety performance (Sverke et al., 2019). Over the last 20 years (see Chapter 3), most empirical studies that try to explain how the effect between JI and its outcomes is processed have interpreted the results based on two main theories: - Conservation Of Resources theory (COR) (Hobfoll, 2001; Hobfoll et al., 2018), (Probst et al., 2017; Richter et al., 2020; Schreurs, Emmerik, Gunter, & Germeys, 2012; Schumacher, Schreurs, De Cuyper, & Grosemans, 2020; Shoss et al., 2020) and - Social Exchange Theory (Blau, 1964) (Bohle, Chambel, Medina, & Da Cunha, 2018; Kim & Kim, 2020; Niesen et al., 2018; Piccoli, Setti, Filippi, Argentero, & Bellotto, 2013). The broad spectrum of these theories (COR and SET), which allow us to explain a large part of the psychosocial phenomena, alerts us to the complexity of the effects of job insecurity on performance and also the depth and breadth of its impact on the employee, as research has confirmed on well-being (Van Dick et al., 2006), trust (Sverke et al., 2002) and motivation (De Witte & Näswall, 2003). 5 – The Context – Life Cycle Stage The relationship between JI and OP can be influenced by the context in which employees behave, as mentioned in the literature about organizational declining and downsizing (Rosenblatt & Greenhalgh, 1984). Working at a start-up is not the same as working at a company with solid experience and profit, in wich concerns job mantenance threat. Working in an endangered company turns more likely to antecipate the possibility of layoffs (Gallie et al., 2017; Kinnunen et al., 2000; Rosenblatt & Greenhalgh, 1984). The context provides several variables that can determine or moderate organizational behaviour (Clitheroe, Stokols, & Zmuidzinas, 1998; Gomes, Rodrigues, & Veloso, 2015) that influence emotions 72 and attitudes (Valdivia & Mart, 2020), with an impact on the conclusions of the investigation (Johns, 2006). In this article, we will explore a context variable that can be calculated from the databases we use: firm life-cycle stage . Life Cycle Theory (LCT) is based on the premise that an organization is similar to a living being, going through different stages of development, between birth to death (Liu & Chou, 2016). Firm life-cycle goes through five stages - Introduction, Growth, Mature, Shake Out and Decline (Dickinson, 2011; Habib & Hasan, 2017; Jackson & Schuler, 1995; Yan & Zhao, 2010) - according to four items (annual dividends scaled by income, percentage of sales growth, capital expenditure as a proportion of a firm’s value and the age of the firm) (Liu & Chou, 2016). Lately, a model was developed based on the pattern of net cash-flow (Dickinson, 2011), which we adopt in this research The organizational environment is characterized by higher profitability in stages 2, 3 and 5 (especially in stage 3), than in stages 1 and 4. In stages 1 and 2 investment is high and in stage 5 the companies sell assets to pay debts. Debt is higher in stages 1 and 2 and decreases in stage 3, when companies distribute more dividends to shareholders or invest in unprofitable projects, to decrease profits and lower taxes (Dickinson, 2011). The lowest risk of insolvency is found in stage 3 (Domingo Terreno, Sattler, & Pérez, 2017). Remuneration of CEO's has higher fixed values in stages 3 and 5, while in stages 1 and 2 pay-for-performance predominates (Liu & Chou, 2016). As the context is different throughout the firm life-cycle, it is likely that it determines different patterns of investment in human capital and that these variations are related to different organizational performance patterns. Hypothesis 2: The stage of the firm's life-cycle predicts the relationship between JI and OP. Method According to literature on JI, a downsizing practice in the organization has a strong correlation with the perception of JI (Gallie et al., 2017; Kinnunen et al., 2000; Rosenblatt & Greenhalgh, 1984) and the consequences of exposure remain relatively stable over time for layoff survivors, even when they no longer report high job insecurity values (Hellgren et al., 1999). On the other hand, crossover phenomenon allows predicting the dissemination of job stress or psychological strain in teams and organizations (Hobfoll et al., 2018) and the consequent psychological withdrawal and deviation of resources towards the regulation of emotions (Hobfoll, 2001). 73 The method designed is based on this theoretical line to define a proxy for JI: the exposure of survivors to layoff and to the loss of job features. 1 – Sample Companies operating in Portugal present annual financial reports of their activity based on the current regulation for the European Union, denominated System of Account Normalization (SNC) (Guerreiro, Rodrigues, & Craig, 2014), since 2010. These data are gathered in longitudinal SCIE database (Sistema de Contas Integradas das Empresas) (INE, 2020), protecting companie identity by the assignment of a unique code for the entire dataset. In 2017, the SCIE database had 394,967 firms, containg firm-level administrative data and yearly accounting information for the population of firms in the private sector, like assets and liabilities and income and expenses. Quadros de Pessoal (MTSS, 2020) is a longitudinal matched employer-employee dataset created from the administrative information collected on an annual basis by the Portuguese Ministry of Labor, Solidarity and Social Security (MTSS - Ministério do Trabalho e da Segurança Social) covering all portuguese firms with at least a single wage-earner. Quadros de Pessoal (QP) dataset does not cover organizations employing civil servants, non-permanent rural workers nor domestic workers. In 2017, the QP database had 290,409 firms and 2,973,246 workers. Each firm and each worker entering the database are assigned a unique identifying number. Using this identifier it is possible to pinpoint all firms and workers that have entered and exited activity. For workers it is possible to follow them along their career through several firms. Company data and employee data are aggregated in employer-employee pairs. The identity of companies and employees is protected by the assignment of the code that identifies them and remains unchanged throughout the dataset. Both sources of information have been combined to assemble a Linked Employer-Employee panel dataset. The analysis with QP and SCIE is conducted for the period 2010 to 2018, the latest year available. Although the temporal spectrum covered by the datasets began in 1982, the codes of the professions, activity sector and accounting system have undergone profound changes, which makes it difficult or even impossible to harmonize statistical production. Since 2010, the accounting system in use has remained constant, as have the other classification systems that we are interested in working on, so we started our sample in 2010 and finished in the last available year, i.e. 2018. 74 From the dataset, we selected firms with 100 or more employees, where we thought we could better study the phenomenon, which is where labour economic researchers usually make the cut-off point to separate large firms from small firms (Centeno & Novo, 2012; Winter-Ebmer & Cardoso, 2010). Of these, we considered only those that remained active throughout the entire period (2010-2018). By using this strategy we aimed at minimizing the impact on our analysis of firm survival issues. We obtained 1.095 firms, registering 6.537 observations, which compose our sample. 2 – Variables Independent Variable of interest: Job Insecurity (JI) As far as we can find out, literature only presents JI measures per scale (Chirumbolo et al., 2020; Darvishmotevali & Ali, 2020; Gallie et al., 2017; Niesen et al., 2018; Piccoli et al., 2017; Probst et al., 2019; Tentama & Rosandy, 2019; D. Wang et al., 2020; H. J. Wang et al., 2015). As we intend to study this variable from official company data, we used a proxy for JI, based on exposure to the context of job loss and job feature loss, operationalized as quantitative JI and qualitative JI, as follows: - Quantitative Job Insecurity (QuanJI) Our database does not include information on whether employees who leave the company do so on their own initiative or on the employer's initiative. As we intend to identify only those employees who were laidoff and not those who left the company on their own initiative, we created a temporary variable that takes on the value: - 1, if the employee has no connection to any company in year t , but worked for one company in year t-1 ; if the employee has a connection, at year t, to a different company he had at year t-1 , but receiving a lower salary than he did; - 0, if he remains connected, at year t , to the same company he did at year t-1 . The temporary variable created with this classification was divided by the total number of employees in the company, to determine the proportion of employees made redundant and thus determine the magnitude of exposure of lay-off survivors to the quantitative JI environment. With this method, the year 75 2018 cannot be included in panel data, because the database does not include 2019, which prevents us from drawing conclusions about which workers were laidoff in 2018. We are aware that this conservative method may ignore employees who have been fired at the company's initiative but who have found a new job within a year and are already linked to a new company in the next annual survey, with the same salary or higher. However, in the absence of information on the date and reason for an employee's departure, it seems more prudent to identify with more certainty those employees who have been absent from the labor market for more than a year, or who had to accept wages lower than they had previously, than to identify all the workers who changed companies, among which there would certainly be several who did so on their own initiative. This method leads, we are sure, to identify a smaller effect than what is likely to exist from JI in OP, but it will allow us to assert it with more confidence. - Qualitative Job Insecurity (QLJI) Within the same constraints reported above, the wage growth rate between t-1 and t was calculated and compared to the profession's average wage growth rate (using the 2-digit profession database code). Without information about the year 2009 to calculate the difference between 2010 and 2009, we excluded the year 2010 from the panel data. A temporary variable (QLJI1) was created, which takes the values: - 1, if the individual’s salary growth rate is less than the average for his profession; - 0, if the growth rate is equal to or greater than profession´s average. The difference between the values of yearly working hours between year t and year t+1 was calculated to determine whether there was a loss in the number of hours contracted with the employee. This difference gave rise to another temporary variable (QLJI2), which takes the values: - 1, if the difference is negative; - 0, if the difference is equal to or greater than zero. The average of QLJI1 and QLJI2 per company and per year was calculated and the result was recorded as the value of QLJI variable. The data underlying the empirical analysis is organized at the firm/year level. Employees’ data is aggregated within firms and year. 76 Dependent Variable: Organizational Performance The relationship between JI and performance has been studied by measuring performance by scale (Chirumbolo et al., 2020; Niesen et al., 2018; Probst et al., 2019) self-rated (De Cuyper & De Witte, 2006, 2007; Rosenblatt et al., 1999) or rated by supervisor (H. J. Wang et al., 2015). In the strategic management literature, measures of objective financial performance, subjective financial performance and subjective non-financial performance are used (Newbert, 2008). With our work centered on company balance data, which can be obtained with no additional collection effort, we have chosen three measures of objective financial performance, which are calculated as described (Delery & Doty, 1996): • ROA, Return On Assets - net income divided by total assets; • ROE, Return On Equity - net income divided by common equity; • ROS, Return On Sales or profit margin - net income divided by net sales. These measures (and also the ROI, Return On Investment) are the most used in studies that relate Human Resources Management (HRM) to financial performance (Aragon & Valle, 2013; Becker & Gerhart, 1996; Shrader, Blackburn, & Iles, 1997; Veloso, 2007; Zhai, 2018), reason why we considered them. However, literature warns that relationships are rarely found with these measures, and the results may be inconclusive or insignificant due to frequent manipulation of accounting measures, undervaluation of assets, creation of distortions through inventory policies, asset depreciation and asset classification (Dalton & Daily, 1998), or because of the ability to profit from strategic human capital holders (Boon, Eckardt, Lepak, & Boselie, 2017). Aware of this risk, we decided to combine three economic measures commonly used to evaluate companies or investments (McPhee & Woodley, 2014; Soute, Martins, Schvirck, & Machado, 2008): • NS - Net Sales; • GVA - Gross Value Added; • EBITDA - Earnings before Interest, Taxes, Depreciation, and Amortization. These indicators are obtained directly from balance accounts and are included in the variables of the SCIE database described above. 77 Firm Life-Cycle Stage We rated companies by the stage of their life-cycle and created the categorical variable 'STAGE'. This variable will be introduced in the empirical econometric model as a set of dummy variables, which assume the value 1 for each category of ‘Stage’, 0 otherwise. Following Dickinson’s model(Dickinson, 2011) and Habib and Hasan’s operationalization (Habib & Hasan, 2017, p. 477), we used the following net cash flow grid to serve as a basis for our ranking: 1. Introduction: if OCF < 0, INVCF < 0 and FINCF ˃ 0; 2. Growth: if OCF ˃ 0, INVCF < 0 and FINCF ˃ 0; 3. Mature: if OCF ˃ 0, INVCF < 0 and FINCF < 0; 4. Decline: if OCF < 0, INVCF ˃ 0 and FINCF < or ≥ 0; 5. Shake-out: all other firm years. OCF – Cash flows from operating activities; INVCF – Cash flows from investing activities; FINCF – Cash flows from financing activities (Dickinson, 2011; Habib & Hasan, 2017). Control Variables The company size (SIZE), measured by thenumber of workers, and the sector of activity (SECTOR) were used as control variables. As these variables correspond to different job insecurity patterns (Erlinghagen, 2008; Lübke & Erlinghagen, 2014) we controled them to prevent them from contaminating results. The SIZE variable was obtained from the number of employees, dividing the sample into quintiles, corresponding to five categories. The variable SECTOR was collected from the ISIC code (International Standard Industrial Classification) available in SCIE. We also used as control variables the Contract Type (CT) and Job Tenure (TEN), since the literature indicates these variables tend to be highly correlated with the subjective perception of Job Insecurity (De Witte & Näswall, 2003; Lübke & Erlinghagen, 2014). Ou goal is to better isolate the effects of our main explanatory variable (JI). CT was calculated as the percentage of open-ended contracts for each company in each year; TEN was defined as the average length of service of employees in each company, for each year. 84 Table 19 – Regression results for NS, gathered by STAGE. STAGE NS Stage 1 NS Stage 2 NS Stage 3 NS Stage 4 NS Stage 5 ln QLJI -0,030* -0,030 0,017 -0,036 -0,048*** (0,018) (0,019) (0,022) (0,048) (0,019) ln ΔQLJI 0,010 0,015 -0,008 -0,023 0,019* (0,010) (0,010) (0,013) (0,037) (0,010) ln QTJI -0,009 -0,002 0,006 -0,037 0,002 (0,020) (0,025) (0,024) (0,061) (0,020) ln ΔQTJI 0,027** 0,021 0,006 0,027 -0,007 (0,011) (0,014) (0,013) (0,041) (0,012) N 2 113 1 263 903 386 1 872 Robust standard errors in parenthesis. Significance levels: 1%, ***, 5%, **, 10%, * STAGE: 1 - Introduction; 2 – Growth; 3 – Mature; 4 - Decline; 5 – Shake-Out (Source: own computations using QP and SCIE) We verified that for every 1% increase in qualitative job insecurity, the GVA (Gross Value Added) decreases 5,4% and NS (Net Sales) decreases 5,3% in small firms (Table 17, cols. 2 and 5), maintaining all other variables constant. In large firms, QLJI (Qualitative Job Insecurity) has no statisticaly relevant effect. We also found a marginally significant negative relationship with QLJI if we consider the entire sample, that may be due to the effect identified for small firms, because it is of smaller magnitude (-0,035 using GVA and -0,034 using NS). Hypothesis 1 is, therefore, partially verified. We hipothized that JI (QLJI and QTJI) would be negatively related to OP (Organizational Performance), but our results reveal that it only happens in small firms. Besides that, the negative relation was found in part of JI (QLJI) and not in QTJI (Quantitative Job Insecurity). QTJI reveals only a marginally significant negative relationship with OP, when using GVA, in the group of small firms (-0,035). Other groups reveal no relationship. 85 About the relation between OP and QLJI that exists in small firms, it should be remembered that QLJI has almost the same value in small firms (100 to 250 employees) as in large firms (more than 250 employees), as described in Table 16, which proportionally means a greater number of occurrences per total employees in small firms than in large firms (cf. Table 15). The sample of small firms also contains proportionately more companies in STAGE 5 than the sample of large firms (Table 13 and Table 14), stage where we have significant results for the relationship between QLJI and OP, which does not exist in any other Stage. Therefore, we have some sample content reasons that allow us to notice the lack of results in large firms. In fact, JI seems less common in large firms than it is in small ones. In STAGE 5 (shake-out), for every 1% increase of QLJI, GVA decreases by 8.5% ( Table 18 , col. 5) and NS 4.8% (Table 19, col. 5). In all other stages, QLJI has no effect. Hypothesis 2 is also partially verified. We hipothized that firm’s life-cycle stage would predict the relationship between JI and OP but our results only confirm that the STAGE variable predicts this relationship in the STAGE 5 (Shake-Out) category. This Stage holds about 30% of our sample, which makes this result significant in our entire sample. However, STAGE can predict the relationship between QLJI and OP, but not between QTJI and OP. So, only a part of JI variable can be predicted in its relationship with OP by STAGE variable. The relationship of OP with QTJI is not entirely verified. It should be noted that the QTJI variable was obtained through a proxy, with very conservative criteria, which may indicate that we were not really able to overcome the lack of the exact variable in our database. In fact, the “reason for leaving” field, which would allow us to measure with more certainty the level of exposure to quantitative job insecurity to which employees were subjected, exists in the QP (MTSS, 2020) survey, but this field has not been distributed for investigation. Thus, the results obtained do not allow us to draw conclusions about the relationship between QTJI and OP. Discussion It was our purpose to study the relationship between JI (Job Insecurity) and OP (Organizational Performance), based on official accounts report and employment surveys, to look for effects already known in psychology literature, but studied directly with employees. Anchored in well known relationship between exposure to layoffs and subjective perception of JI (Gallie et al., 2017; Kinnunen et al., 2000; Reicherta & Tauchmann, 2017; Rosenblatt & Greenhalgh, 1984). 86 Our results are consistent with meta-analyses that conclude a negative influence of JI on various aspects of performance (task performance, contextual performance, counterproductive work behavior, creativity, and safety performance) (Cheng & Chan, 2008; Gilboa, Shirom, Fried, & Cooper, 2013; Jiang & Lavaysse, 2018; Sverke et al., 2019). Literature that counters this trend of negative impact of Job Insecurity on performance is scarce and presents the particularity that performance is often self-rated (De Cuyper & De Witte, 2006, 2007; Qian, Yuan, Niu, & Liu, 2019; Rosenblatt et al., 1999; Sverke et al., 2002; Vander Elst et al., 2016), which can inflate results, according to the limitations that the authors assume to exist (De Cuyper & De Witte, 2006; Qian et al., 2019; Sverke et al., 2002). However, the positive relationship between JI and performance can happen during situations of company restructuring, in which increased performance is used as a strategy to preserve employment (Koen, Low, & Van Vianen, 2020; Piccoli, Reisel, & Witte, 2019). In this case, our results contradict these authors, revealing a negative and significant relationship between QLJI (Qualitative Job Insecurity) and OP (Organizational Performance) in STAGE 5 (Shake-Out). However, as our results refer to organizational performance and not individual performance, this conclusion does not rule out the possibility that, among the workforce, there are employees who improve their individual performance. When the variables QLJI and QTJI (Quantitative Job Insecurity) are analyzed simultaneously, the impact of QTJI is low or non-existent on performance, because QTJI only has an effect through the mediator variable QLJI (Chirumbolo et al., 2020; Fischmann, Sulea, Kovacs, Iliescu, & De Witte, 2015); the same happens with the effect of QTJI on employees' well-being, also mediated by QLJI (Callea, Lo Presti, Mauno, & Urbini, 2019; Nawrocka, De Witte, Brondino, & Pasini, 2021). Thus, the fact that we did not obtain a significant QTJI effect, having analyzed the variable together with QLJI, is in line with the results obtained in other works and is justified by being a variable with an indirect effect on performance. Another conclusion of our work is that the negative relationship between QLJI and OP only exists in small firms and not in large firms. Although our small firms are defined between 100 and 250 employees, as we have not analyzed companies with less than 100 employees, we can see that the occurrence of QLJI is equivalent in both categories. Taking into account the crossover phenomenon of resources and emotions, described by Hobfoll (Hobfoll et al., 2018), this result is expected, since the crossover takes place in close interpersonal relationships. Hence, in order to have a significant crossover, large firms would have to proportionally present as many QLJI cases as small firms, which is not the case. In these 87 small firms, there is more possibility of interaction with all or a great part of the employees than in large firms, with more than 250 employees and some of them with thousands of employees. Relying on COR theory (Hobfoll, 1989, 2001), we can understand results found in this study: the loss of job features (QLJI) is more salient than any gain in resources that, temporally, may coincide with these losses; individual resources mobilized to counter the losses and regulate emotions cause resource depletion; these emotional states are transferred to other employees with close relationships through a crossover phenomenon, causing the same mobilization and depletion of resources; individual performance decreases and, reaching several employees, organizational performance decreases, which depends on the sum of individual performances. Insecure employees also reciprocate to unfair exchange by entering in psychological withdrawal (Taris et al., 2001) and by lowering their efforts in generating new ideas, in which depends organisation’s ability to adjust, compete, and survive (Niesen et al., 2018). Another important aspect is the fact that only STAGE 5 shows a significant negative relationship between QLJI and OP, following the COR theory in valuing the context (restructuring) to the detriment of individual differences to predict behaviour. This study has contributed to this field of research by using secondary and open access data to analyse the relation betwen Job Insecurity and Organizational Performance. Although JI is a subjective phenomenon, it was possible to identify, through the result of employee behaviors, a significant relationship, although of reduced magnitude, between QLJI and OP. These results require further investigation to look for the possibility of a causal relationship, but indicate that the data included in official employment surveys (in Portugal, QP) have potential use to predict the effect of psychological variables on organizational performance, requiring no effort. and cost of assessment and avoiding psychological reactivity to the measurement process. This study presents a novelty in the approach to research in the field of organizational psychology, as it works with psychological variables based on official data, which reflect behaviors in different contexts. For this, we have followed literature which highlights the importance of context over dispositional variables in explaining variability in behavior (Hobfoll, 2001; Hobfoll et al., 2018; Probst, Jiang, & Benson, 2014). The same context tends to be evaluated in the same way by different people; the variability of behavior is much more dependent on the context than on their individual differences, such as in the case of loss or threat of job loss, which is an important resource that ensures economic security and skills development (Hobfoll et al., 2018). 88 Our conclusions can be applied at the level of human resources management, which must implement strategies to reduce job insecurity, in order to contribute to a better organizational performance. They can also be applied in terms of policies for the labor market in Portugal and similar studies should be carried out for other countries, in order to verify whether the conclusions we present about the negative impact of job insecurity are or not transversal to other cultures and legal frameworks, as COR theory suggests (Hobfoll et al., 2018). In Portugal, our results suggest that policies that promote greater job security will be beneficial to firm performance. Limitations of this Work and Research Suggestions The data included in this study refer partly to a period of severe economic crisis in the country (20112015), so the conclusions may be less significant than in other periods. In fact, data corresponds to the period in which the country was under external financial intervention, and in which the state cut wages and pensions, in what was followed by private companies on the amounts that companies could legally act. For this reason, it is essential, in order to strengthen the conclusions, that the same work be repeated for previous years and for subsequent years as soon as more information becomes available. This work refers only to the companies that operated in Portugal during the considered period of time and which fulfilled the legal obligation to report to the portuguese state. As is well known, the portuguese business fabric is mostly made up of small and medium-sized companies, a reality that is not present in our sample, as we have analysed firms with more than 100 employees; we do not know whether the relation we have described can be replicated to small firms, or to other countries with more fertile economies. A more relevant limitation of this study resides in the variable QTJI (Quantitative Job Insecurity), obtained by proxy, given the lack of a field not included in the database (motive of dismissal). The fact that the relationship between QTJI and OP (Organizational Performance) is not verified may be due to its status of mediation variable or to the measure chosen to overcome the lack of information; that is why the study should be repeated if and when access to the database field is authorized. 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Decision Sciences , 47 (3), 404–436. 116 Perceived Control Organizational Commitment (Mäder & Niessen, 2017) Mediation Negative Affect Job Performance COR theory Negative Work Reflections (Piccoli, De Witte, & Reisel, 2017) Mediation Psychological Contract Breach Counterproductive Work Behaviour Psychological Contract Theory, SET Psychological Contract Breach Organizational Citizenship Behaviour Organizational Justice Counterproductive Work Behaviour Organizational Justice Organizational Citizenship Behaviour (Probst et al., 2017) Moderation Psychological Capital Job Performance COR theory, SET (Selenko, Mäkikangas, & Stride, 2017) Mediation Social Identity Well-being Social Identity Theory Social Identity Job Performance (Bohle, Chambel, Medina, & Da Cunha, 2018) Mediation Organizational Commitment Job Performance SET Moderation Organizational Support (Khan & Ghufran, 2018) Mediation Organizational Support Job Performance SET Organizational Citizenship Behaviour (Niesen et al., 2018) Mediation Psychological Contract Breach Innovative Work Behaviour SET (Tufail, Sultan, Khalil, & Sahibzada, 2018) Mediation Job Satisfaction Job Performance Psychological Contract Theory (Asif, Fiaz, Khaliq, & Nisar, 2019) Mediation Organizational Identification Job Performance Social Identity Theory 117 (Guo, Liu, Chu, Ye, & Zhang, 2019) Moderation Supervisor and Coworker Support Safety Performance COR theory (Piccoli, Reisel, & Witte, 2019) Mediation Job Satisfaction Job Performance Appraisal Theory Organizational Commitment (Shaikh, Mangi, & Bukhari, 2019) Mediation Emotional Intelligence Job Performance No Theory (Shin, Hur, Moon, & Lee, 2019) Mediation Intrinsic Motivation Job Performance SelfDeterminatio n Theory Intrinsic Motivation Organizational Citizenship Behaviour (Adewale, Dahiru, MukhtarShehu, & Kofar-Mata, 2020) Mediation Self-Efficacy Job Performance COR Theory Moderation Emotional Intelligence (Bibi, 2020) Mediation Work Engagement Job Performance No Theory Moderation Organizational Justice (Darvishmotevali & Ali, 2020) Moderation Psychological Capital Well-being Job Performance Appraisal Theory (Kim & Kim, 2020) Mediation Job stress Job Performance SET Organizational Commitment Moderation Ethical Leadership (Naru & Rehman, 2020) Mediation Stress Job Performance PersonEnvironment Fit theory (Richter et al., 2020) Mediation Rumination Turnover COR Theory (Schumacher, Schreurs, De Cuyper, & Grosemans, 2020) Moderation Informational Justice Job Performance COR Theory (Shoss, Brummel, Probst, & Jiang, 2020) Moderation Job Satisfaction Counterproductive Work Behaviour COR Theory Job Satisfaction Turnover Intentions 118 We found that some of the variables included in the studies belong to one and the same concept. For example, well-being integrates mental health . Thus, we looked for the definitions of each of the variables to integrate convergent variables in a single concept. The definitions of the variables were sought in the studies that refer to them, except for organizational commitment and psychological distress , which were not described and for which we looked for other sources, as mentioned in Table 20. We present these definitions in Table 21Erro! A origem da referência não foi encontrada.: Table 21 - Variables Definitions Variables Definition Counterproductive Work Behaviour Behaviours that have the potential to be harmful to organizations. (Shoss et al., 2020, p. 304) Emotional Intelligence The competency of a person to understand, aware of, and control own emotions in order to understand and recognize the emotions of others. (Shaikh et al., 2019, p. 178) Ethical Leadership The demonstration of normatively appropriate conduct through personal actions and interpersonal relationships, and the promotion of such conduct to followers through twoway communication, reinforcement, and decision-making. (Kim & Kim, 2020, p. 3) General Strain Well-being - mental and physical health complaints. (Vander Elst et al., 2016, p. 107) Informational Justice Employees’ perceptions of whether the organisation communicated in an adequate and timely fashion. (Schumacher et al., 2020, p. 2) Innovative Work Behaviour The intentional introduction and application within a role, group or organisation of ideas, processes or procedures, new to the relevant unit of adoption, designed to significantly benefit the individual, the group, organisation or wider society. (Niesen et al., 2018, p. 1) Intrinsic Motivation Encompasses cognitive (i.e., challenge seeking) and affective (i.e., task enjoyment) components. (Shin et al., 2019, p. 2) Job Insecurity Perceived threat of job loss. (Elst et al., 2011, p. 216) Job Performance Task performance, contextual performance, counterproductive work behaviour, creativity, and safety compliance. (Sverke, Låstad, Hellgren, Richter, & Näswall, 2019, p. 2) Job Satisfaction Internal evaluation of the favourability of one’s job (Shoss, 2017, p. 300); work-related well-being (Richter & Näswall, 2019, p. 23). Need for Closure Motivated need for certainty, intolerance of ambiguity and preference for predictability. (Chirumbolo & Areni, 2010, p. 195) Negative Affect Feeling upset or unpleasantly aroused. (Mäder & Niessen, 2017, p. 234) Negative Work Reflection Negative thinking about job-related issues, failures, or negative events at work. (Mäder & Niessen, 2017, p. 235) 119 Organizational Citizenship Behaviour The behaviour that helps the organization but not directly in the organization’s formal reward system. (Khan & Ghufran, 2018, p. 2) Organizational Commitment (a) a desire (affective commitment), (b) a need (continuance commitment), and (c) an obligation (normative commitment) to maintain employment in an organization. (Meyer & Allen, 1991, p. 61) Organizational Identification A strategy in which employees feel personal attachments and identity with their organizations. (Asif et al., 2019, p. 178) Organizational Justice Organizational justice is concerned with employees’ perceptions of how fairly they are treated by the organization. (H. J. Wang et al., 2015, p. 2) Organizational Support The dimension in which people believe that their organization considers their contributions and is concerned about their well-being. (Bohle et al., 2018, p. 396) Perceived Control The employees’ situational appraisal of his or her ability to control the job insecure situation. (Elst et al., 2011, p. 216) Psychological Capital A multifaceted construct that consists of four positive personality strengths: self-efficacy, hope, resilience, and optimism. (Probst et al., 2017, p. 2) Psychological Contract Breach Contributions of the employee in terms of time, effort, and work attitude, versus promised benefits on the part of the employer, such as salary, appreciation, challenging work, or prospects for promotion. Psychological contract breach occurs when one party perceives another to have broken their promise. (Niesen et al., 2018, p. 3) Psychological Distress Opposite to psychological well-being. (Witte, 1999, p. 165) Rumination The act of repetitively thinking about and dwelling on the insecure future of the job. By studying the relationship between job insecurity and rumination about job insecurity, we highlight the process of stress experiences.(Richter et al., 2020, p. 2) Safety Performance Work behaviours that are conducted in accordance with security and safety regulations within the organization. (Sverke et al., 2019, p. 5) Self-Efficacy The confidence that individual employee’s exhibits in handling organisational related tasks and situations. (Adewale et al., 2020, p. 23) Social Identity Define the individual’s place in society (…) and also guide their behaviour and evaluations. (Selenko et al., 2017, p. 858) Social Protection Social welfare regime and union density. (Sverke et al., 2019, p. 2) Stress The insight of an inconsistency between stressors and individual capabilities to fulfil these demands in the job environment. (Naru & Rehman, 2020, p. 310) Supervisor and Coworker Support Refer to all behaviours that superiors and colleagues perform to promote employee development. (Guo et al., 2019, p. 292) Turnover Changed to a job at another organization during the last year. (Richter et al., 2020, p. 4) Turnover Intentions Attitude, intention to quit. (Shoss et al., 2020, p. 298) 120 Uncertainty Avoidance The level of stress and anxiety experienced by individuals in response to uncertain situation. (Roll et al., 2015, p. 167) Well-being Job satisfaction and mental health (Richter & Näswall, 2019, p. 25); a state of happiness and contentment, with low levels of distress, overall good physical and mental health and outlook, or good quality of life (VandenBos, 2007, p. 1155). Work Engagement Work engagement is defined as a persistent, positive, affective motivational state of fulfilment that is characterized by vigour, dedication, and absorption. Vigour refers to working highly energetically. Dedication refers to being strongly involved in work and experiencing a sense of significance, enthusiasm, inspiration, pride, and challenge. Absorption refers to being fully concentrated and happily engrossed in work. Highly engaged employees find their work interesting, meaningful, and energizing and experience positive affect, including happiness, joy, and enthusiasm. Hence, work engagement can be viewed as an active state where an employee experiences positive work-related affect and heightened motivation (H. J. Wang et al., 2015, p. 3). According to the definition contents, it is possible to aggregate some variables into a single concept, as follows: • Job satisfaction, general strain, psychological distress, negative affect, negative work relations, stress, job stress, emotional health complaints, physical health complaints and rummination, in the concept of well-being ; • Self-efficacy in the concept of psychological capital ; • Supervisor and coworker support and organizational support in the concept of support ; • Need for closure and uncertainty avoidance in the concept of uncertainty avoidance ; • Job performance, innovative work behaviour, counterproductive work behaviour, organizational citizenship behaviour and safety performance in the concept of performance ; we opted to add the variables turnover and turnover intentions, since they mean the minimum level of performance. Aggregating the concepts as described, we obtain the following final variables (Table 22), ordered by type of mediator / moderator relationship, which we will use from now on: 121 Table 22 - Type of Relation Variables Type of Relation Intrinsic Motivation Mediation Organizational Commitment Mediation Organizational Identification Mediation Organizational Justice Mediation Perceived Control Mediation Psychological Capital Mediation Psychological Contract Breach Mediation Social Identity Mediation Support Mediation Well-being Mediation Work Engagement Mediation Organizational Commitment Moderation Emotional Intelligence Moderation Ethical Leadership Moderation Informational Justice Moderation Organizational Justice Moderation Psychological Capital Moderation Support Moderation Uncertainty Avoidance Moderation Well-being Moderation We can illustrate the type of relation within the theoretical body analyzed using Graph 1 representation. Our option for designing moderation variables in the left lies on recent literature pointing out temporal precedence for moderation (Karazsia & Berlin, 2018; Kraemer, Kiernan, Essex, & Kupfer, 2008). In fact, authers argue that when moderation variables moderate an event, they were present before the event occurs and that this time precedence is crucial to distinguish moderation from mediation variables. 122 Graph 1 - Variables Effect In this Graph 1, variables having a negative effect on performance were represented in red. Those that have a positive effect were represented in green. The variables are aggregated in two sets, representing the moderating variables, on the left, and the mediating variables, positioned between JI and performance . This positioning intends to map the statistical foundation of the relationship of moderation and mediation. Moderation relationship describes the influence of a variable on the relationship between two others, but it is temporally antecedent to that relationship; in the case of mediation, the mediating variable has an effect temporally after the explanatory variable and it is through it that the effect on the variable of interest is produced (Karazsia & Berlin, 2018). According to Graph 1, in the last twenty years, literature has mainly described moderating variables with a positive effect on performance (such as emotional intelligence and ethical leadership ) and mediating variables with a negative effect (for instance intrinsic motivation and organizational commitment ). To understand these relationships, we identified in the articles, as presented on Table 20, the use of eight theoretical models, for which we list the variables included in the respective studies Table 23 ): 123 Table 23 - Theories Appraisal Theory COR Theory Person-Environment Fit Theory Psychological Contract Theory Organizational Commitment Emotional Intelligence Well-being Organizational Justice Perceived Control Informational Justice Psychological Contract Breach Psychological Capital Psychological Capital Support Psychological Contract Breach Support Well-being Well-being Well-being Self-Determination Theory Social Exchange Theory Social Identity Theory Uncertainty Management Theory Intrinsic Motivation Ethical Leadership Organizational Identification Organizational Justice Organizational Commitment Social Identity Work Engagement Organizational Identification Well-being Psychological Capital Psychological Contract Breach Support Well-being Most of the moderating and mediating variables explored to explain the relationship between JI and performance are framed with the following theories: Appraisal Theory, Conservation of Resources (COR) Theory, Psychological Contract Theory and Social Exchange Theory (table 4). The conceptual scope and the consequent explanatory power of these four theories make them more suitable to explain the complex relationship between the two main variables ( job insecurity and performance) , which, as we will see below, is less feasible with the other four theories used, Person-Environment Fit Theory, Self-Determination Theory, Social Identity Theory and Uncertainty Management Theory. 124 Theoretical Frameworks We now revisit theories that frame the interpretation that the authors of the aforementioned studies used in their conclusions. We add the theoretical body of Trust, which seems to us to have an integrating potential, since all theories resort, in some way, to this concept. It is our goal to evidence how these different theories explain the efects on job performance of employees behaviours and attitudes. All of them use at least a concept that is commom to Trust, as we will further argue. Conservation of Resources Theory (COR), Appraisal Theory (AT) and Person-Environment Fit Theory (P-E Fit) Conservation of Resources Theory (Hobfoll, 2002) it is a theory that argues that individuals are motivated by the acquisition of new resources and the protection and retention of resources they already have. Resources are defined as “anything perceived by the individual to help attain his or her goals” (Halbesleben, Neveu, Paustian-Underdahl, & Westman, 2014, p. 5) and can be objects (physical resources with utilitarian or status function), conditions (like marriage, tenure, seniority), personal caracteristics (orientation towards the world that increases stress resistance) and energies (like money, time and knowledge, that help geting other resources) (Hobfoll, 1989). The loss or threat of loss of resources induces stress that is more salient than the gain of resources, producing a much greater negative emotional impact than the acquisition of resources produces a positive impact. To acquire resources or to prevent the loss of resources the individual needs to invest resources, hence it is more likely to gain resources for those who already have more resources, and the investment can lead to resource depletion, causing strain and stress, for those who have less resources. For this reason, and also because the resources are organized in groups (caravans), the loss of resources generates a spiral of loss, just as the gain of resources generates a spiral of gains. In fact, if the individual loses his job, he will lose part of the interpersonal relationships that are related to his job, as well as his salary and other benefits. In the same way, getting a job after being unemployed will also bring in several resources at the same time. 125 An extension of COR Theory states that trust is not a resource, because it is also under the control of another person, but it is used as a sign that the investment of resources will succeed in meeting the goal of obtaining more resources (Halbesleben & Wheeler, 2015). A competing theory to explain both stress and motivation is Appraisal Theory (Lazarus & Folkman, 1984) which essentially differs from COR theory in that it first understands stress as a result of individual perception and, only secondly, as a result of the requirement of the situation. In fact, Hobfoll points out the importance of the individual's interpretation of the amount of resources he has to face resources gain and retain efforts, but argues that the requirement of the situation, by itself, is directly responsible for the stress response that presents little individual variability and even between cultures (Hobfoll, Halbesleben, Neveu, & Westman, 2018). These arguments make COR theory more suited to the organizational context, than Appraisal Theory (Taris, Schreurs, & Van Iersel-Van Silfhout, 2001), so we follow it in this work. Person-Environment Fit theory explains stress as a lack of correspondence between the person's characteristics and the demands of the context. More specifically, the theory is divided into two parts: one that focuses on the correspondence between the resources of the context and the motivations, objectives and personal values; another that concerns the correspondence between the requirements of the context and the personal skills and abilities. The subjective evaluation of misfit produces tension and stress (Edwards, Caplan, & Harrison, 1998). The concept of P-E fit was, however, positioned as a resource, with integration in COR theory (Wheeler & Halbesleben, 2009), so we follow COR theory in this theoretical spectrum. Psychological Contract Theory (PCT) Psychological Contracts are individual beliefs in a reciprocal obligation between the individual and the organization (Rousseau, 1989, p. 121). It is not about expectations on one’s job beyond what is perceived as agreed on topics as work environment or decoration of physical workplace, but specifically about what you will receive in return for complying with obligations (Robinson, 1996). It is the individual's belief that there is an obligation of reciprocity that guides their behavior, but this belief does not affect the behavior of the other party, because it is an individual belief. However, the more explicit and public the contract and the longer the individual's contribution and the organization's reciprocity lasts, the stronger the individual's belief that there is a psychological contract that requires reciprocity (Rousseau, 1989). Literature distinguishes between transactional and relational psychological contract: the first refers to responsibilities and roles at work and focuses on economic and performance factors; the second refers 132 It has been consensual for authors that the construction of a trust relationship evolves from a more cognitive stage to a more affective one (Costa, Fulmer, & Anderson, 2017). Shapiro proposes an evolution of deterrence-based trust, knowledge-based trust and identification-based trust (Shapiro et al., 1992); Lewicki and Bunker suggest the same types of trust as Shapiro, but substitute deterrence-based trust for calculus-based trust, following Deutsch (1973) and his argument for calculating the likelihood of consequences that will arise from trust breach or benefits for maintainig expected behaviour (Lewicki & Bunker, 1995); McAllister restricts evolution to cognitive-based trust and affective-based trust (McAllister, 1995). A less consensual aspect is the distinction between the concepts of trust and distrust (Costa et al., 2017): there are authors who understand that distrust is not only the absence of trust, but the probability of an unpleasant situation occur, predisposing the individual to adopt defensive behaviours (Lewicki, McAllister, & Bies, 1998); others, more recently, understand trust and distrust as the opposite poles of a single scale, with mistrust corresponding to low trust (Pugh, Skarlicki, & Passell, 2003; Schoorman, Mayer, & Davis, 2007). Some authors point to several dimensions for trustworthiness of a trustee, resulting in several types of trust, capable of existing separately (Clark et al., 1997; Kasperson, Golding, & Tuler, 1992; Mayer et al., 1995; McAllister, 1995; Shapiro et al., 1992; Whitener & Werner, 1998). Relying on someone's competence to perform a task does not mean trusting that the same person will not take advantage of our frailty when it is possible or will always seek to benefit us. In the following Table 24 , we summarize the dimensions found: Table 24 - Trustworthiness Dimensions Trustworthiness Models Trustworthiness Dimensions (Butler & Cantrell, 1984, p. 19) Consistency Integrity Openness Loyalty Competence 133 Reliability, predictability and good judgement in handling situations. Honesty and Truthfulness Mental accessibility, a willingness to share ideas and information freely. Benevolent motives, willingness to protect and save face for a person. Technical and interpersonal knowledge and skills required to do one's job. (Kasperson et al., 1992, p. 170) Commitment Predictability Caring Competence Uncompromised commitment to a mission or goal; Objectivity and fairness in decision processes and the provision of accurate information. Expectations fullfilment. Act in a way that shows concern for and beneficence to trusting individuals. Technical competency in their mandated area of responsibility. (Shapiro et al., 1992, pp. 366, 369, 371) KnowledgeBased Trust DeterranceBased Trust IdentificationBased Trust Behaviour predictability based on knowledge and understanding. Consistency of behaviour; Reliability. Full internalization of the other's preferences. (Lewicki & Bunker, 1995, p. 149,151,153) KnowledgeBased Trust CalculusBased Trust IdentificationBased Trust Grounded on predictability of behaviour Founded on consistency and on deterrence Full internalization of the other’s desires and intentions (McAllister, 1995, pp. 25–26) Cognitive Trust Affective Trust 134 Reliability, Dependability and Emotional Security Competence and Responsibility (Mayer et al., 1995, pp. 717– 719) Integrity Benevolence Ability Fairness, Justice, Consistency, and Promise fulfilment Loyalty, Openness, Caring or Supportiveness Knowledge and Skills (Mishra, 1996, pp. 6–9) Reliability Openness Concern Competence Expectations about consistent or reliable behaviour Honesty One party believes that it will not be taken unfair advantage of by another Technical expertise (Clark et al., 1997, p. 208) Consistent Behavior Integrity Openness Loyalty Competence Consistency, Fairness, Predictability, Discretion and Good Judgement Sincerity, Honesty, Truthfulness and Promises’ fulfilment Mental accessibility and availability; A willingness to share ideas and information freely and accurately Benevolent motives associated with intentions, motives, shared values and goals; Commitment to and willingness to protect and save face for a person The technical, interpersonal knowledge and skills required to do one's job, decision making and role performance. (Whitener & Werner, 1998, pp. 516–517) Behavioural Consistency Behavioural Integrity Sharing and Delegation of Control Communicat ion Demonstration of Concern for Employees Needs 135 Reliability and Predictability Telling the truth; Keeping promises Employees participate in decision; Managers share control Accurate information; Explanations for decisions; Openness Consideration and sensitivity for employees needs and interests; Acting in a way that protects employees’ interests; Refraining from exploiting others for the benefit of one´s own interests (Dietz & Den Hartog, 2006, p. 560) Predictability Integrity Benevolence Competence Relates specifically to consistency and regularity of behaviour Involves adherence to a set of principles acceptable to the other party, encompassing honesty and fair treatment, and the avoidance of hypocrisy Reflects benign motives and a personal degree of kindness toward the other party, and a genuine concern for their welfare Refers to the other party’s capabilities to carry out her/his obligations (in terms of skills and knowledge) We wanted to summarize all the different dimensions identified by the authors, so we decided to compare the descriptions looking for common elements that allowed us to isolate unique concepts. From the authors' proposals (titles and description), we were able to report on six different dimensions, although none of the authors used more than five dimensions to describe trust. We attribute the identification and description that seemed to best illustrate the content of each dimension. In the following Table 25, we summarize the model that results from this work: 136 Table 25 - Trustworthiness Dimensions Resume Trustworthiness Dimensions Predictability Integrity Delegation Openness Benevolence Competence Relates specifically to consistency and regularity of behaviour Involves adherence to a set of principles acceptable to the other party, encompassing honesty and fair treatment, and the avoidance of hypocrisy Employees participate in decision; Managers share control Accurate information; Explanations for decisions; Mental accessibility and availability Reflects benign motives and a personal degree of kindness toward the other party, and a genuine concern for their welfare Refers to the other party’s capabilities to carry out her/his obligations (in terms of skills and knowledge) One of the dimensions, competence , refers only to the prediction of skills and knowledge to perform a task or fulfill a responsibility successfully. All other dimensions refer to the character of the trustee, which allows to predict its general behavior (Colquitt et al., 2007). The Relation Between Job Insecurity, Performance and Trust Job Insecurity undermines employer trust building (Pfeffer, 2007) because JI is perceived to be included in the traditional psychological contract, in exchange for employee loyalty (Niesen et al., 2018; Richter & Näswall, 2019). In JI , as we saw earlier, the employee's perceptions about downsizing contexts are included, but also about the loss of job quality and the failure to keep promises. Psychological contract breach also appears in the literature as a mediator between trust and performance (Robinson, 1996) and the employer's own behaviour, when it reveals distrust in its employees, generates distrust in them, through reciprocity. JI has a negative association with trust (Ashford, Lee, & Bobko, 1989; Cheng & Chan, 2008; Richter & Näswall, 2019; Sverke et al., 2002) and trust relates positively to performance (Davis et al., 2000; Mayer & Gavin, 2005; Vanhala & Dietz, 2019; Verburg et al., 2018). Job insecurity has a negative effect on performance via work engagement, but when organizational justice (one of the dimensions of trustworthiness) is low (H. J. Wang et al., 2015). The perception of justice is also generated by the 137 collective distribution of rewards (Pfeffer, 2007), which is higher in private companies than in public ones, and that the authors suggest derives from compensation for greater job insecurity (Monteiro, Portela, & Straume, 2011). To our knowledge, only a meta-analysis on job insecurity found no significant relationship between trust and performance (Sverke et al., 2002), but this fact was interpreted by the authors as being due to the difficulty in evaluating performance and the consequent use of self-report measures, where respondents tend to overestimate their own performance. Discussion Resuming the analysis of the variables that we presented at the beginning of this work (Graph 1) we proposein this section to discuss all the relations found simultaneously between variables (intrinsc motivation; psychological contract breach; organizational commitement; organizational justice, etc) both with a mediation and/or moderation efect in performance, using/in the ligth of the theories that we referred to previously (COR, PCT, SET, SIT, UMT and SDT theories). We will point out as we intent to analys JI-Performance relation, the minor coverage or some lack of scope of these theories when we look for a more comprehensive theoretical frame on this particular subject. Finally, we will use Trust Theory for this interpretation, as we propouse the recognition of Trust as an integrative and usefull concept to understant the influence of employees in performance, in particular JIPerformnace relation. Using Conservation of Resources Theory (COR Theory) In a JI context, there is a need to invest resources to prevent job loss. Those who have more resources, such as emotional intelligence , psychological capital , well-being , organizational justice , support and ethical leadership , are better positioned to gain or retain resources. This is the case with these variables as moderators, which reduce the impact of JI on performance . Organizational commitment is not a resource, so it cannot be understood as a moderating variable, in the light of this theory. As a mediating variable, it can be understood as a state that corresponds to a change in resources and that has an impact on performance. The same reasoning is valid for the variables intrinsic motivation , organizational identification , work engagement and even to well-being , that is simultaneously a state and a resource (Hobfoll et al., 2018). Psychological capital , social identity and emotional intelligence are resources that, in the function of mediating variables are depleted, generating defensive withdrawal for resource conservation. 138 Organizational justice , perceived control and support , as part of trust dimensions, may serve as signals that resource loss will not be severe. On the other hand, psychological contract breach can be a sign that the loss of resources could be significant, inducing conservation of resources. Using Psychological Contract Theory The effect of psychological contract breach on well-being and performance is immediately understandable through the breach in the expectation of receiving security, in exchange for employee loyalty. The fact that the most serious effects of JI on well-being are felt by permanent employees can be explained by having more expectations than temporary employees (Cheng & Chan, 2008; De Cuyper & De Witte, 2007; Richter & Näswall, 2019). The remaining variables do not fit this theory. Using Social Exchange Theory (SET) According to SET, the norm of reciprocity encourages a sense of obligation of reciprocity appropriate to the individual's perception of the other's behavior. In the context of Job Insecurity , it is expected that employees will lower their efforts and performance will be affected according to this perception of unfair exchange on the part of the organization. SET was used to interpret variables that are based on perceptions about employer behaviour, such as ethical leadership and support , or attitudinal variables, such as organizational commitment or organizational identification . In the case of personality traits, they are already difficult to explain in light of this theory because they are variables that do not result from organization's behavior, so it is not expected that they will impact performance through the reciprocity mechanism. However, some researchers reporting the moderation of psychological capital (Probst et al., 2017) uses SET to discuss the results, but only the impact of Job Insecurity on Performance . Psychological capital intervenes in the relationship between these two variables with a moderating role and this moderation is interpreted using COR Theory. Using Social Identity Theory Job Insecurity affects the social identity of the individual by the threat of marginalization in the group of employees, which has more social value than the group of unemployed. Feeling marginalized from a valuable group, the employee is likely to feel less identified with the group of employees and lessen their effort at work. This theory was used to describe the effect of variables such as social identity and 139 organizational identification (Asif et al., 2019; Selenko et al., 2017), but it doesn't suit personality traits variables like psychological capital or emotional intelligence . Using Uncertainty Management Theory (UMT) This theory allows us to understand the impact of of uncertainty avoidance on well-being (van den Bos, 2001; Witte, 1999), through the moderation of fairness , which when present reduces affective expression (concerns about the possibility of job loss). Here, it was used to interpret the moderating effect of organizational justice on the relationship between JI and performance and also the mediating effect of work engagement (H. J. Wang et al., 2015). For the same variable, organizational justice , Piccoli (Piccoli et al., 2017) uses both SET and Psychological Contract Theory to explain mediation. Being a theory that requires the presence of fairness to be applicable, it does not adapt to the remaining relationships of variables. Using Self-determination Theory (SDT) Being a theory of motivation, development and well-being, it is possible to understand the mediating and moderating effect of the variables intrinsic motivation and work engagement (need for autonomy) psychological capital and emotional intelligence (need for competence) in well-being and performance . Yet the variables, organizational commitment, organizational identification and social identity , can fit into the concept of autonomous motivation . However, the effects of ethical leadership, informational justice, organizational justice, support, uncertainty avoidance, perceived control and psychological contract breach are not explainable. What if We Use Trust? Resuming the analysis of the variables that moderate or mediate the relation between JI and performance, agregated and represented in Graph 1, we found that some of them correspond to the description of trustworthiness dimensions that resulted from our work (Table 25). Specifically, we compared the variables found in the studies whose description corresponds to the description of the dimensions (see Table 20), concluding that they can be included in the concept of trustworthiness (Table 26). All other variables remain classified in the types defined above (personality traits and perceptions; attitudes and states), following in our study. 140 Table 26 - Integrating Variables in Trustworthiness Dimensions Trustworthiness Dimensions Predictability Integrity Delegatio n Openness Benevolence Competenc e Relates specifically to consistency and regularity of behaviour Involves adherence to a set of principles acceptable to the other party, encompassing honesty and fair treatment, and the avoidance of hypocrisy Employees participate in decision; Managers share control Accurate information; Explanations for decisions; Mental accessibility and availability Reflects benign motives and a personal degree of kindness toward the other party, and a genuine concern for their welfare Refers to the other party’s capabilities to carry out her/his obligations (in terms of skills and knowledge) Uncertainty Avoidance Organizational Justice Informational Justice Support Ethical Leadership Psychological Contract Breach Organizational Identification Perceived Control It should be noted that the dimensions of trust that represent the largest number of the above variables Table 26 ) are integrity and benevolence, precisely those that are considered to be the most relevant for employees to develop trust in leaders and in the organization (Krot & Lewicka, 2012; Pirson & Malhotra, 2011). The remaining variables that didn´t fit Trustworthiness Dimensions are: emotional inteligence, organizational commitment, psychological capital, well being, social identity and work engagement , i.e., Personality Traits type and States type (see Table 20). Now, representing the variables by type, we reach the following summary (Graph 2): 141 Graph 2Type of Variables Keeping the mediating and moderating variables in the position we explained above, we can see that the moderators are mainly of Trustworthiness-type (marked in blue) and Personality Traits-type (in gray); most of the mediating variables are again of Trustworthiness type (in blue) and now also of State-type (in yellow). When we try to interpret the entire set of variables with the theoretical body of trust, we are immediately faced with moderation variables of personality traits type (such as emotional intelligence, psychological capital, etc.), which refer to the employee, and its effect cannot be understood through trust that, to a large extent, is under the control of the trustee. State-type variables (such as work engagement, organizational commitment , etc.) as moderators, are also not interpretable, although we can understand them as mediators and as variables of interest, some of them described in literature, like well-being, for example (Campbell et al., 2013; Hopkins & Weathington, 2006). Summarizing the main types of variables, we will have: