The impact of market orientation and strategic HRM on firm performance: the case of Chinese enterprises
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The impact of market orientation and strategic HRM on firm performance: the case of Chinese enterprises Li-Qun Wei1 and Chung-Ming Lau2 1 Department of Management, Hong Kong Baptist University, Hong Kong, China; 2 Department of Management, Chinese University of Hong Kong, Hong Kong, China
Correspondence: L-Q Wei, Department of Management, Hong Kong Baptist University, Hong Kong, China. Tel: þ 852 3411 7566; Fax: þ 852 3411 5583; E-mail: [email protected]
Abstract This study examines market orientation as the antecedent to strategic human resource management (SHRM), and the related effects on firm performance in an emerging economy context. It is suggested that the relationship between SHRM and firm performance is moderated by ownership type and autonomy in staffing of these firms. Empirical results from a sample of Chinese firms from various industries and regions reveal that SHRM mediates the relationship between market orientation and firm performance. It is also found that the effect of SHRM on firm performance is stronger for firms with a higher degree of autonomy in staffing, and weaker for private firms. Other types of ownership (state or foreign) have no effect on this relationship. Journal of International Business Studies (2008) 39, 980–995. doi:10.1057/palgrave.jibs.8400395 Keywords: market orientation; strategic HRM: firm performance; China
Received: 22 August 2005 Revised: 4 May 2007 Accepted: 17 July 2007 Online publication date: 22 May 2008
INTRODUCTION With globalization, the business environment is becoming more competitive, with more rapid changes. To cope with this increasing pressure, firms have begun to develop more sophisticated competitive strategies, and to undergo internal realignment, especially those in emerging economies (Wright, Filatotchev, Hoskisson, & Peng, 2005). Chinese firms are no exception to this trend, and they are reforming with the aim of enhancing competitiveness. Many of them have adopted a market-oriented approach. This new orientation affects various organizational processes. One of them is human resource management (HRM) systems, which have been charged with the mission of motivating and fully utilizing human resources in order to improve firm performance. Studies conducted in mature market economies indicate that human resource systems should be designed from a strategic angle to provide full benefit to the firm (Wright & McMahan, 1992). Thus firms in China might enhance competitiveness by aligning their HRM systems with the firms’ strategies (Wei & Lau, 2005). There has been an increasing interest in strategic human resource management (SHRM) in the past two decades. Many theoretical and empirical studies have been conducted, with the view that people are valuable resources and hence they likely are a source of sustainable competitive advantage (Schuler & MacMillan, 1984;
Impact of market orientation and SHRM on firm performance
Li-Qun Wei and Chung-Ming Lau
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