Testing a model of strategic HRM in the Chinese software industry

This study tests a strategic HRM model by examining the relationship between HR practices and perceived firm performance in 39 software firms in China. Due to the small sample size, Partial Least Squares modelling was used to test the hypotheses as PLS was considered to be the most appropriate tool in explaining path modelling in small sample size. We found that the effectiveness of HRM can be explained by the paths from the perceived effectiveness of HR practices such as hiring and performance appraisal. The path from HR department effectiveness was positively linked to critical success factors, which led to perceived firm performance. Critical success factors mediate the relationship between the effectiveness of HR practices and firm performance. Research and practical implications will be discussed.