The effects of linkage between business and human resource management strategies

Contingency theory holds that human resource management methods are selected in accordance with the type of competitive strategy adopted by a business. It moreover assumes that companies that closely coordinate their business strategy and HRM activities achieve better performance than companies that do not. This study attempts to examine the interactive effects of various combinations of business and HRM strategies from the standpoint of contingency theory. The conclusions are based on an analysis of questionnaires completed by 315 local firms in Taiwan. The results show that different business and HRM strategy combinations have different effects on organizational performance. However, these differences were not always consistent with the predictions of contingency theory.