Putting people first matters: the contribution of human resource management to strategy implementation and organizational performance

Abstract

My thesis investigated the role of human resource management (HRM) in strategy implementation and its contribution to organizational financial and innovation performance. Drawing on a dataset from a large-scaled survey administered in multiple countries, my first study found that in two emerging economies – China and Hungary, HRM that took care of employees’ well-being and facilitated their task completion mediated the relationship between firms’ customer-oriented strategy and financial performance. The mechanism was that HRM supported firms in translating their customer-oriented strategy into customer-linking capability, that is, the capability to establish and maintain close relationships with customers. This capability conduced to superior financial performance. My second study reviewed and synthesized existing research on the relationship between HRM and innovation. In this study I proposed a framework to link HRM and innovation at the individual, team, and organizational level from an organizational learning perspective. I argued that HRM stimulated innovation by contributing to three sub-processes of organizational learning: knowledge creation, knowledge retention and knowledge transfer. This study also identified research gaps in this stream of literature and proposed future research directions. Recognizing an important gap in the literature that the HRM researchers have not fully integrated the role of market in the innovation research, my third study empirically examined whether HRM could promote firms’ product and process innovation by enhancing firms’ capability in sensing market trends. I found that in ten out of thirteen countries in the sample, HRM spurred firms’ innovation partially or fully through developing firms’ market-sensing capability. Moreover, I found that this effect differed across countries: in high power distance countries, HRM had a stronger positive effect on innovation. In overall, my thesis integrated literatures from HRM, strategy, marketing, and organizational learning and made contributions to each of these fields. In alignment with the human relations theory, it reveals that putting people first matters. By putting people first, HRM contributes to strategy implementation and stimulates firms’ financial and innovation performance.