Does national culture matter? The Influence of human resource Management practices on business Strategy and firm performance

Abstract

By synthesising knowledge-based theory of the firm, organizational alignment theory and contingency theory, the present study aims at establishing the nexus among HRM practices, business strategy, culture and firm performance. Data were garnered with the aid of a self-reported questionnaire from 147 firms’ managers working in Sri Lanka. Having confirmed the reliability and validity of the scales, the hypotheses were tested using the most powerful PLS-SEM approach. The results reveal that HRM practices were accounted for significant variance in innovation, quality enhancement and cost reduction. The study further confirms the moderating effects of power distance and uncertainty avoidance on the relationship between HRM practices and innovation and quality enhancement. Notably, the study discloses that HRM practices influence firm performance via business strategy. The present study has made overarching contributions to the frontiers of organisation literature and provided several fruitful practical implications for managers, administrators and practitioners.