The effects of firm financialization on human resource management: How financialization affects the design of managerial jobs

At the firm level, financialization entails an emphasis on short-term financial performance and increased engagement of non-financial firms in financial activities. Advancing knowledge on the effects of socio-economic contexts on HRM, this study explores how financialization affects a key HRM practice, that is, job design. We contend that higher financialization, as reflected in greater recourse to external debt, greater recourse to shareholder loans instead of equity, and greater investments in financial assets, is associated with the design of managerial jobs confined in the sphere of execution, that is, characterized by less authority over strategic decisions. We test our hypotheses on a dataset that merges fine-grained survey data on the delegation of authority over strategic decisions with secondary data on financialization for a sample of 219 Italian firms. Our findings reveal a negative relation between financialization and delegation, which is more evident for functional strategic decisions.