Strategic flexibility, innovative HR practices, and firm performance. A moderated mediation model
| Date | 16 October 2017 |
| Pages | 1335-1357 |
| DOI | https://doi.org/10.1108/PR-09-2016-0252 |
| Published date | 16 October 2017 |
| Author | Lin Xiu,Xin Liang,Zhao Chen,Wei Xu |
| Subject Matter | HR & organizational behaviour,Global HRM |
Strategic flexibility,
innovative HR practices,
and firm performance
A moderated mediation model
Lin Xiu
Department of Management Studies,
University of Minnesota Duluth, Duluth, Minnesota, USA
Xin Liang
University of Minnesota Duluth, Duluth, Minnesota, USA
Zhao Chen
China Center for Economic Studies, Fudan University, Shanghai, China, and
Wei Xu
Changzhou Institute of Technology, Changzhou, China
Abstract
Purpose –The purpose of this paper is to examine the role of innovative HR practices as an important
mechanism through which strategic flexibility affects firm performance as well as the role of female
leadership in this relationship.
Design/methodology/approach –Data were gathered from a sample of 113 firms in China. The authors
collected information on organizational strategy, HR practices, CEO information, corporate social
responsibility and other firm characteristics in terms of firm age, location, and financial performance.
Conditional procedural analysis was conducted to test the model.
Findings –The authors found strong evidence in support of the mediation relationship in which
organizations with a strong focus on strategic flexibility are more likely to adopt Innovative HR Practices.
Furthermore, the authors found that the extent to which firms have adopted innovative HR practices has a
strong effect on employee productivity. In addition, the authors found that female leadership enhances
strategic flexibility-performance relationship.
Research limitations/implications –Information on strategic flexibility, HR practices and firm
performance was collected at the same time. Future studies based on panel data would be helpful to establish
the causal relationships in the model.
Practical implications –The authors’findings suggest that practitioners should put more emphasis on
developing innovative HR practices, as they are required by strategic flexibility.
Social implications –Firms pursuing strategic flexibility should feel more confident when appointing a
female CEO, because the results show that female leadership may enhance the positive impact of strategic
flexibility on firm performance.
Originality/value –This research study is the f irst empirical examina tion of the mediating in fluence
of innovative HR practic es on the relationship be tween strategic flexi bility and firm performa nce.
The study also shows tha t female leadership benefits an orga nization in implementing strat egic flexibility.
The results are of value to r esearchers, human resource mana gement managers, employees, a nd executives
who are seeking to develop practices that are flexible and innovative in order to stay competitive in
dynamic environments .
Keywords Quantitative,Firm performance, Strategic flexibility, Female leadership,Innovative HR practices
Paper type Research paper
Personnel Review
Vol. 46 No. 7, 2017
pp. 1335-1357
Emerald Publishing Limited
0048-3486
DOI 10.1108/PR-09-2016-0252
Received 26 September 2016
Revised 14 March 2017
Accepted 27 April 2017
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0048-3486.htm
©Lin Xiu, Xin Liang, Zhao Chen and Wei Xu. Published by Emerald Publishing Limited. This article is
published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce,
distribute, translate and create derivative works of this article ( for both commercial and non-com-
mercial purposes), subject to full attribution to the original publication and authors. The full terms of
this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode
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A moderated
mediation
model
Introduction
Rapid development in technologies, intense competition, and increasing globalization has
fundamentally reshaped the external environment of business, making it dynamic, complex,
and unpredictable to business administration. In some countries, such as China, where the
institutional environment is also changing dramatically, volatility has been challenging the
leaders of businesses. To stay competitive and relevant in intensely dynamic environments
characterized by discontinuities, innovation, and institutional uncertainties, firms need to
develop strategic flexibility to adapt to unprecedented changes (Hitt et al., 1998). Strategic
flexibilityreferstoafirm’s abilityto modify its strategic course inorder to stay competitive in
substantial, uncertain, and rapidly occurring environmental changes that impact firm
performance(Aaker and Mascarenhas, 1984; Evans, 1991).Empirical evidence reported in the
literature shows that strategic flexibility has a positive impact on firm performance in
dynamic environments (Grewal and Tansuhaj, 2001; Nadkarniand Narayanan, 2007; Worren
et al., 2002) throughvarious mechanisms, from modularity inproduct design (Sanchez, 1995)
and organizational forms (Schilling and Steensma, 2001) to contingent alliance development
(Young-Ybarraand Wiersema, 1999). In thisstudy, we propose that in additionto these efforts
and mechanisms, organizations in China thatadopt strategic flexibility are more likelyto use
innovativeHR practices, and in so doing, strategicflexibility leads to better firmperformance.
We are also interested in the role of gender-based leadership in this relationship.
Researchers have increasingly emphasized that both the firm’s strategic type and
strategic orientation should affect the choice of the set of HRM practices (Schuler and
Jackson, 1987). Specifically, some have advocated that organizations need to develop HR
practices that are flexible and innovative in order to adapt to changing environmental
contingencies (Delery and Doty, 1996; Way et al., 2015; Wright and Snell, 1998). In the past
three decades in China’s economic reform, Chinese firms have gradually shifted away from
the traditional personnel administration to innovative HR practices (Chow, 2004; Wei and
Lau, 2005; Zheng et al., 2009). Such innovative HR practices include free market selection
and recruitment, incentive rewards, performance evaluation and promotion, training and
development, and worker participation in the decision-making process that are closely
associated with human resource outcomes and firm performance (Zheng et al., 2009).
While strategic flexibility is beneficial for business in dynamic environments, developing
and maintaining strategic flexibility would also call for a unique leadership that endorses
appropriate operational practices and policies in support of strategic flexibility. After all,
organizations are the reflection of their top leaders’attributes (Hambrick and Mason, 1984).
It has been found that leaders’commitment to statusquo and past strategy increases as they
get older and get saddled in their positions (Miller, 1991; McClelland et al., 2010), suggesting
that leadership attributes do affect firm adaptation andstrategic flexibility. As an important
attribute of top management, leadership provides strategic nuances such as vision,
motivation, r ole modeling, an d social value s that develop or ganizations s trategically .
To cultivate strategic flexibility, certain leadership in particular leadership that is versatile
and considerate would outperform leadership that is rigid-minded and ignorant.
This renders a promising direction for studying leadership’s impact on strategic
flexibility from a gender-based demarcation due to advantages associated with gender-
based leadership. In particular, female leadership may have an advantage over male
leadership in promoting strategic flexibility in an organization. Female leaders are believed
to follow a more participative, interactional, and relational style of leading (Fondas, 1997;
Adler, 1997). Fondas (1997) observes that findings on female leadership built upon feminine
advantages (Chodorow, 1999; Helgesen, 1990) show that:
when juxtaposed against calls for companies to improve their competitiveness by transforming
themselves into learning, self-managing, empowering, and continuously improving organizations –
transformations that rely upon more interactional, participative, and relational management style –lead
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