Relationship between strategic human resource management and firm performance

Purpose - Previous studies suggest that strategic human resource management (SHRM) is beneficial to firm performance. This study seeks to investigate the moderating effect of product market strategy (PMS), one of the contextual factors, on the relationship between SHRM and firm performance. Design/methodology/approach - This study conducted a survey on 235 Taiwanese firms and hierarchical regression analysis was performed. Findings - The results failed to support the “universalistic” SHRM perspective. Only the interaction between an innovative PMS and SHRM exerted a significant effect on firm performance, which supporting the argument of the “contingency” perspective. The findings of this study confirmed the validity of the contingency model in an Asian society. Research limitations/implications - Different from most previous studies conducted in a Western context, this study examined the data of Taiwan, and thus examined a very different cultural and institutional environment. Although this study obtained valuable results, the limitations of the subjective data, number of measurement items and the cross‐sectional design were discussed. In a future study, more work on revealing the influence of other unexplored factors to better understand the determinants of firm performance should be done. Practical implications - Coping with innovation needs, the degree to which traditional human resource management (THRM) is transformed into SHRM determines how well a firm is able to sustain and enhance growth. This will enable firms to keep pace with the rapid environmental changes associated with globalization. Originality/value - Investigates the moderating effect of PMS on the relationship between SHRM and firm performance in a Taiwanese context.