Effects of Strategic Human Resource Management Practices on Organizational Performance: Mediating Role of Work Outcomes

Abstract

Introduction SHRMis the pattern of planned human resource deployments and activities intended to enable the firm to achieve its goals (Wright and McMahan, 1992).SHRM bridges business strategy and human resources management(hereafter, HRM) through integration of human resources(further referred as HR) with the business and its environment as well as on implementing strategic change and growing the skill base of the organization to ensure that the organization can compete effectively in the future (Holbeche, 2004).In environments that are undergoing several changes, Hayes (1985) argued that building operations competence could be a means by which corporate strategy can be developed and leveraged to enhance performance. There has been a debate by numerous researchers whether SHRM should always be positively related to firm performance. In both human resource literatures, there are four perspectives that argue the contribution of SHRM practices for firm competitive advantage and organizational performance. First, Universalistic scholars argue that there is a universal set of HRM best practices that can maintain a firm's performance (Lau & Ngo, 2004). Secondly, Contingency scholars hold different points of view and argue that the assumptions underlying the HRM strategy-performance link are applicable only under high external fit conditions, termed the 'best fit' school (Boxall&Purcell, 2003; Bamberger &Meshoulam, 2000). Third, Delery and Doty (2000) proposed the notion of the configurational perspective that focuses on how unique patterns or configurations of multiple independent variables are related to the dependent variable, by aiming to identify ideal type categories of not only the organizations but also the HR strategy. Fourth, the resource-based view stipulates that the fundamental sources and drivers of superior performance are chiefly associated with the attributes of resources and capabilities, which are valuable and costly-to-copy (Peteraf& Bergen, 2003). Several other studies support the importance of this resource-based view (Hult&Ketchen Jr., 2001; Ramsay, 2001; Foss& Knudsen, 2003; Gottschalg&Zollo, 2007). Those studies revealed that in most firms today, it is the employees' skills and commitment that create higher performance. It is, therefore, important that organizations truly leverage on the workforce as a competitive weapon to develop a superior performance.