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Background
Rarely until recently was it realized that a firm's human resources and human capital are sources of competitive advantage ([46] Huselid et al. , 1997). Competitiveness cannot be achieved without managing performance and at the same time developing the skills and competence of employees. Performance management potentially makes the most significant contribution to individual and organizational learning and helps to raise organizational efficiency and promote growth. An effective human resources strategy can have a significant impact on issues such as organizational development and homogenization, acquisition of competitive skills and abilities, cultural and role changes, career development, decrease of tensions and insecurities, commitment and reduced conflict in the workplace and creative employment ([56] Lingg, 1996). To improve performance at the organizational level it is essential to create a culture and situation of continuous learning of employees and of the organization ([81] van der Sluis, 2007).
Both practices and systems of human resource development (HRD) vary with the variation in the external environment. The human resources management (HRM) literature proclaims that the field of HRD is not easy to define, because it is set in a national context ([30] Fombrun et al. , 1984; [41] Hendry and Pettigrew, 1990). Thus, to understand the issues of PM and HRD raised within this paper it is essential to know the Nepalese organizational context. With the restoration of democracy, the Government has initiated a major reform policy to promote manufacturing industries and their competitive power. The new Industrial Policy 1992 gave an emphasis to deregulation, encouraging competition and placing a reliance on market forces in the allocation of resources ([47] IIDS, 1996). The Government has encouraged domestic and foreign investors through measures such as licensing, tax facilities, foreign direct investment (FDI), and other institutional arrangements. The Government also made efforts to encourage private investors to increase investment in the country and to bring in managerial and technical skills, modern technology, and foreign capital. Despite these institutional arrangements, in the SAARC (Association of South Asian Regional Cooperation) region Nepal is among the less reforming countries when compared to India, Pakistan, Bhutan, Sri Lanka, Afghanistan and Bangladesh ([76] The World Bank, 2008). At the industry level, although Government has initiated various reform measures and enacted a number of rules and...