This paper examines the relationship between human resource (HR) practices and firm performance, focusing on the causal order. Using data from 45 business units (62 data points), the study investigates how HR practices correlate with past, concurrent, and future operational performance measures. The results show high and invariant correlations between HR practices and performance measures at all three time points. However, controlling for past or concurrent performance significantly reduces the correlation between HR practices and future performance. This suggests that the observed relationships may not be causal, as the correlation disappears when accounting for prior performance. The study highlights the challenges in establishing causality in HR-performance research. While many studies have found positive relationships between HR practices and firm performance, they often lack methodological rigor to demonstrate a true causal link. The paper discusses three alternative explanations for the observed covariation: reverse causation, spurious relationships, and implicit performance theories. Reverse causation suggests that performance may influence HR practices, while spurious relationships imply a third variable may be responsible for both. Implicit performance theories suggest that respondents may report HR practices based on their perception of firm performance. The study uses a unique sample of autonomous business units within the same company to explore the causal order. It measures HR practices, organizational commitment, and various operational and financial performance indicators. The results show that HR practices are strongly correlated with organizational commitment, which in turn influences operational performance, expenses, and profits. However, controlling for past or concurrent performance significantly reduces these correlations, indicating that the observed relationships may not be causal. The paper concludes that while there is a positive association between HR practices and firm performance, the causal relationship is not definitively established. The study underscores the need for more rigorous research designs to determine the true causal direction. It also highlights the importance of controlling for alternative explanations and the limitations of current research methods in establishing causality. The findings suggest that while HR practices may contribute to performance, the direction of causality remains uncertain.This paper examines the relationship between human resource (HR) practices and firm performance, focusing on the causal order. Using data from 45 business units (62 data points), the study investigates how HR practices correlate with past, concurrent, and future operational performance measures. The results show high and invariant correlations between HR practices and performance measures at all three time points. However, controlling for past or concurrent performance significantly reduces the correlation between HR practices and future performance. This suggests that the observed relationships may not be causal, as the correlation disappears when accounting for prior performance. The study highlights the challenges in establishing causality in HR-performance research. While many studies have found positive relationships between HR practices and firm performance, they often lack methodological rigor to demonstrate a true causal link. The paper discusses three alternative explanations for the observed covariation: reverse causation, spurious relationships, and implicit performance theories. Reverse causation suggests that performance may influence HR practices, while spurious relationships imply a third variable may be responsible for both. Implicit performance theories suggest that respondents may report HR practices based on their perception of firm performance. The study uses a unique sample of autonomous business units within the same company to explore the causal order. It measures HR practices, organizational commitment, and various operational and financial performance indicators. The results show that HR practices are strongly correlated with organizational commitment, which in turn influences operational performance, expenses, and profits. However, controlling for past or concurrent performance significantly reduces these correlations, indicating that the observed relationships may not be causal. The paper concludes that while there is a positive association between HR practices and firm performance, the causal relationship is not definitively established. The study underscores the need for more rigorous research designs to determine the true causal direction. It also highlights the importance of controlling for alternative explanations and the limitations of current research methods in establishing causality. The findings suggest that while HR practices may contribute to performance, the direction of causality remains uncertain.