Does power distance orientation really matter? A human resource flexibility – firm performance link: a moderated-mediation model

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Purpose The present study aimed at analyzing the hypothesized relationship between human resource (HR) flexibility and firm performance with the mediating effect of firm innovation and the moderating role of firm-level power distance orientation. Design/methodology/approach The proposed hypotheses were tested with the two-wave data collected from 209 registered information technology (IT) firms operating in Pakistan. The SMART-PLS examined the model’s hypothesized moderated, mediated and moderated-mediation relationships. Findings The results confirmed significant relationships between HR flexibility, firm innovation and performance while showing that the link between HR flexibility and firm performance is mediated by firm innovation. The results demonstrated that the firm-level power distance orientation negatively affected the HR flexibility–firm innovation link. These findings provide implications on how HR flexibility leverages firm innovation and performance. However, a power distance orientation in firms may diminish the positive effect of HR flexibility. Practical implications HR practitioners and top management can leverage these findings to design and implement policies that promote HR flexibility within IT firms for superior innovation and performance. Originality/value Our study offers valuable insights into the contribution of HR flexibility to firm innovation and performance. Specifically, the findings indicate that power distance orientation negatively affects the relationships between HR flexibility, firm innovation and performance. Therefore, HR practitioners and top management can leverage these findings to design and implement policies that promote HR flexibility within IT firms for superior innovation and performance.