Impact of customer-oriented strategy on financial performance with mediating role of HRM and innovation capability
| DOI | https://doi.org/10.1108/PR-02-2018-0056 |
| Published date | 01 April 2019 |
| Date | 01 April 2019 |
| Pages | 631-643 |
| Author | Naveed Iqbal Chaudhry,Iqra Aftab,Zainab Arif,Usman Tariq,Muhammad Azam Roomi |
| Subject Matter | HR & organizational behaviour,Global HRM |
Impact of customer-oriented
strategy on financial performance
with mediating role of HRM and
innovation capability
Naveed Iqbal Chaudhry, Iqra Aftab, Zainab Arif and Usman Tariq
Department of Business Administration,
University of the Punjab, Lahore, Pakistan, and
Muhammad Azam Roomi
Prince Mohammad Bin Salman College of Business and Entrepreneurship,
King Abdullah Economic City, Saudi Arabia
Abstract
Purpose –The purpose of this paper is to explain the relationship between customer-oriented strategy (COS)
and financial performance (FP) of firm, to examine the role of supportive human resource management (HRM)
in COS implementation and contribution toward FP of firm. It also examines the mediating role of innovation
capability (IC) between COS and FP of firm.
Design/methodology/approach –The approach used for this study is quantitative. Data required for
testing of hypothesis were gathered from the managers of manufacturing firms of Gujranwala, Pakistan.
To conduct the data analysis, structural equation modeling was used.
Findings –Findings of this study showed that there is significantly positive relation between COS and FP
with the significant positive mediating effects of supportive HRM and IC.
Research limitations/implications –This research has been conducted in manufacturing sector only. So,
it is suggested to future researchers to carry out this research in other sectors. Second, this research focused
only on IC but there are many other organizational capabilities (OC) that can be used.
Practical implications –This research would be helpful for all firms adopting COS to understand that how
to mobilize their HR to accomplish the purpose of strategy. It will enable manufacturing firms to understand
and work on IC.
Originality/value –This study is anticipated to add value to the existing literature of strategy process and
OC. This study is one of the first to examine IC as mediator between COS and organizational FP so it opens
new areas for research.
Keywords Quantitative, Mediation, Financial performance, Customer-oriented strategy,
HRM and innovation capability
Paper type Research paper
1. Introduction
Customer-oriented strategy (COS) is defined as the strategy adopted by firms focusing to
make its employees understand the needs of its customers by aligning their efforts with the
purpose of satisfying and retaining customers (Liao and Subramony, 2008). COS is a
strategy that makes firms highly committed to understand, serve and monitor customer
needs. Such COS driven firms set their business objectives and strategies with the basic
focus on enhancement of customer satisfaction. COS also enables firms to increase their
satisfied customers by frequently assessing their strategies and feedback of their customers
(Lin et al., 2016). COS has been embraced by numerous firms in order to compete
and survive in worldwide changing market. COS empowers firms to recognize and
accomplish customers’needs in exceptional way better than rivals. Strategies that are
Customer-oriented are likely to positively influence firm’s performance (Sun et al., 2016).
To accomplish the objective of COS, firms have to shepherd their HR. A firm is said to
have supportive human resource management (HRM) when it focuses on needs,
Personnel Review
Vol. 48 No. 3, 2019
pp. 631-643
© Emerald PublishingLimited
0048-3486
DOI 10.1108/PR-02-2018-0056
Received 13 February 2018
Revised 8 August 2018
Accepted 23 August 2018
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0048-3486.htm
631
Role of HRM
and innovation
capability
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