Between Loyalty and Performance: A Conceptual Framework for Understanding Informal Network Influence on HRM in the South Caucasus

Abstract

This paper develops a conceptual framework to understand how informal social networks shape human resource management (HRM) practices in the South Caucasus, drawing on theoretical work on organizations in Georgia, Armenia, and Azerbaijan. Drawing on institutional theory, social capital theory, and comparative HRM scholarship, the paper identifies a structural tension, termed the loyalty-performance tension, between the relational logic embedded in post-Soviet informal networks and the meritocratic logic prescribed by mainstream HRM theory. The framework proposes that this tension is governed by four interacting determinants: the quality of the institutional environment, the depth of network embeddedness, professional HRM competence, and resource availability. The paper argues that loyalty logic in HRM is not a cultural residue awaiting dissolution through institutional modernization but a rational, adaptive governance mechanism that persists because formal institutions do not yet provide equivalent guarantees of reliability, competence, or trustworthy conduct. Five theoretically grounded propositions are advanced, each carrying specific implications for comparative HRM theory, institutional scholarship, and practitioners engaged in people management reform across post-Soviet contexts. The paper concludes by establishing a research agenda for empirical investigation of the framework across the South Caucasus and cognate settings.