Business strategy, human resource systems, and organizational performance in the Spanish banking industry

Abstract

Although human resource (HR) systems in the form of bundles of HR practices and their impact on organizational performance have attracted considerable attention, the role that business strategy could play in this relationship remains uncertain, particularly in service industries. In order to avoid any confounding effects, this study analyzes the performance impact of adopting different HR systems in an empirical setting in which employees are vital if the company is to remain competitive, the firms belong to the same industry and the primary activities involved are the delivery of services to customers. Based on survey data from 86 banking institutions in Spain, three HR systems were identified, two of which rendered better organizational performance when matched to defender strategies, thus supporting a contingency explanation of the adoption of HR systems. Findings showed that even in an industry under strong universalistic pressures to adopt certain predictable HR practices, matching HR systems with a business strategy pays off.