The Effect of Human Resource Management Practices on Firm Performance: Empirical Evidence from High-Tech Firms in Taiwan

Abstract

This study comprehensively evaluated the links between human resource management (HRM) practices and firm performance of Taiwan's high-tech firms. Using data from Hsinchu science-based industrial park, the study found that HRM practices such as training & development, teamwork, benefits, human resource planning and performance appraisal have significant effect on employee productivity. In addition, benefits and human resource planning are negatively related to employee turnover This study also shows that competitive strategies, such as cost strategy and differentiation strategy, have revealed moderating effects on the relationship between HRM practices and firm performance. Introduction In Taiwan, technology-intensive industries have expanded from 30% of the total industry in 1987 to 43% today, while labor-intensive industries have declined to 25%. In other words, important changes have occurred in Taiwan's industry structures over the last decades. Making Taiwan a `high-tech island' has been the most important industrial policy direction of the government. Accordingly, the development of science-based industrial parks will help to pool resources, cluster high-tech firms together, and facilitate RD Miles & Snow, 1984 ). According to Porter's (1980) framework, effective business strategies can be classified as either costleadership strategies or differentiation strategies. Each of these strategies implies something different about the potential role of human resources in improving firm performance. …

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