Linking Differentiation Strategies, Strategic HR Practices and Firm Performance: Does Employees’ Trust in Employer Really Matter?

Abstract

The article examines the relationship between differentiation strategies and firm performance by investigating the mediating role of strategic HR practices. Additionally, moderated mediation model is also projected with employees’ trust in employer as a moderator. Primary data of 466 respondents were collected from 105 organizations from Indian settings. Statistical tools such as factor analysis, correlations, multiple regressions and bootstrapping were applied. The results revealed a significant and positive mediation of strategic HR practices in the hypothesized relationship. The findings emphasize the significance of the social exchange theory in explaining how the connection between strategic HR practices and firm performance is moderated by employees’ trust in their employers. The indirect effect of differentiation strategies on firm performance via strategic HR practices was found stronger at a higher level of employees’ trust in employer.