Strategic Human Resource Management and Firm Performance: Mediating Role of Transformational Leadership

Abstract

Relationships between transformational leadership, Strategic Human Resource (HR) practices, and firm performance were studied using a sample of 121 managers from different organizations in India. Transformational leadership was measured by requesting respondents to judge how frequently each of the 20 statements fitted the CEO or the head of the organization. Strategic HR was measured by requesting respondents to indicate their opinions and feelings on the extent to which their organization was characterized by each of the 18 items listed. Firm performance was measured through six parameters-market share growth, sales growth, return on investment, return on assets, return on sales, overall performance-as perceived by the respondent. The score on each performance parameter was recorded in comparison to the major competitors of the organization during the previous year. Results show that strategic HR partially mediates the relationship between transformational leadership and performance.