Exploring the Relationships among HRM Investment, Strategy Implementation, and Firm Performance with Multiple Correspondence Analysis

Seungyoup Choo ()
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Seungyoup Choo: Division of General Studies, Kyonggi University, Suwon 16227, Republic of Korea

Sustainability, 2024, vol. 16, issue 11, 1-15

Abstract: This study visually explores the relationships among human resource management (HRM) investment, strategy implementation, and firm performance for small- and medium-sized enterprises (SMEs) in Korea. This exploratory research focuses on the significance of strategy implementation, an often overlooked factor in the relationship between HRM and firm performance, as well as HRM investment, which can enable the development of organizational capabilities. We conducted a multiple correspondence analysis to understand the interrelationship between HRM investment, competitive strategy implementation, and firm performance. We differentiated the results by group type according to the level of HRM investment, competitive strategy implementation, and firm performance. We found that firms with high HRM investment achieve the highest performance by implementing an ambidextrous strategy that simultaneously pursues cost leadership and differentiation. Ultimately, this study’s results suggest that for firms to create a competitive advantage through the strategic capitalization of human resources, long-term and continuous investment in HRM is necessary, even if short-term visible effects are not observed while the HRM system is being built, to eventually establish the organization’s capacity to support strategy execution. This study’s potential contribution is to extend the resource-based view by establishing the role of strategy implementation in linking HRM systems as organizational capabilities to performance.

Keywords: HRM investment; competitive strategy; strategy implementation; resource-based view (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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