Customer service-focused HRM systems and firm performance: evidence from the service industry in Taiwan

Abstract

This study adopts a resource-based view, attraction–selection–attrition theory and a focused approach to examine the link between service-focused human resource management (HRM) systems and firm performance. Internally, we examine employee competency as the ‘black box’ between service-focused HRM systems and firm performance. Externally, we examine the effect of the interplay of a service-focused strategy and service-focused HRM systems in predicting firm performance. We collect data from different sources (i.e. executives, human resource members, and line managers). Using a final sample included 2120 respondents from 175 firms in the service industry in Taiwan, the results show that customer service-focused employee competency transmitted 53% of the effect of customer service-focused HRM systems on firm performance. In addition, when a firm implements a less service-focused business strategy, service-focused HRM systems leads to significant improvement in firm performance. Implications for research are discussed.

Keywords:

• Fit
• service-focused strategy
• service-focused HRM systems
• service-focused employee competency, firm performance, service industry in Taiwan

Acknowledgement

The authors thank the IJHRM Editor (Michael Dickmann) and two anonymous reviewers for their valuable comments. We also thank Professor Chih-Hsun Chuang for his valuable suggestions and assistance.

Notes

1. Source: Directorate General of Budget, Accounting and Statistics, Executive Yuan, R.O.C., and National Statistics, R.O.C. (Taiwan).

2. The RMSEA value was greater than .10, indicating poor model fit. However, past research has demonstrated that RMSEA is extremely sensitive to sample size, and the value tends to increase with smaller sample size (Chen, Curran, Bollen, Kirby, & Paxton, 2008). Past research has suggested that CFI would be preferable when sample size is small (Kim, 2005, p. 387).