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Increasing evidence has been found in support of a relationship between human resources management (HRM) systems and organization effectiveness, which has emerged as an important body of work in the past decade. Noticeably absent has been sound theoretical development that explains how such HRM system effects operate. In an effort to address such theoretical limitations in the area, the present article proposes a social context conceptualization that incorporates culture, climate and political considerations to shed light on the intermediate linkages between HRM systems and organization effectiveness. Then, the proposed conceptualization is used to examine how the process dynamics involved with diversity objectives and initiatives might be associated with organization effectiveness. Implications and directions for future research are discussed.