Linking Human Resource Strategy to Firm Performance in the Ready-Made Garment Industry: Evidence from Bangladesh

Abstract

Currently, RMGs in Bangladesh are under immense pressure from the free market economy, rapid technology improvements, and constant changes in their customers' tastes and preferences. These preferences emphasize the importance of overall system reliability, including the reliability of production systems, skills and knowledge-based machine operations, tools handling techniques of materials, a wide variety of value-adding processes, and management functions. Every organization's performance and quality goals are significantly enhanced by the capability and proper use of its human capital. Also, because of the comprehensive technological development in the recent past, RMG, as a labor-intensive industry, appears to have proper HRM practices with quality efficiency, consistency, and optimal values. This research aims to report the findings of a study testing the relationship between human resource (HR) strategies and firm performance in the RMG sector of Bangladesh. Also, this research presented the influence of employee commitment as a mediator. The strategies for human resources in Bangladesh are increasingly important at the RMG, as this business must protect its business prosperity in the global competition. The RBV theory is the theoretical framework for HR policy in recent times, in which it has been assumed that rare, invaluable, and favorable tools can have competitive advantages. The present study utilized a quantitative methodology, precisely defined as an explanatory (deductive-reasoning) and correlational research. The researcher also applied a cross­sectional survey within the Bangladeshi garments arena as well. A survey-based design with various measures (survey instruments) was used to assess top management's perceptions of HR strategy, employee commitment, and firm performance. A web-based survey was mailed to 750 employees of the selected industrial unit, and 344 responses were collected to confirm the required responses. To arrive at the thesis goals, four significant hypotheses have been established. The suggested theories have been evaluated using structural equation modeling (SEM). SEM studies backed four observations. There were two critical findings of the study. First, all HR strategies are positively connected to firm performance, aside from the internal career ladders. Furthennore, the association between HR (except in the Internal Career ladder) and firm perfonnance mediates substantially with employees' affective commitment. The results of this study offer useful lessons in many aspects by promoting and expanding theory and analysis. This study started by focusing on human resources, in particular, management practice for personnel services in the enterprise with resource-based perspectives and the framework for social exchange. In this study, the elements or mechanisms affecting employee strategies, engagement, and outcomes are also analyzed and defined. The theories were tested using empirical evidence to explain whether the results match the models proposed. According to this analysis's findings, most of the hypotheses have been confirmed by the empirical test based on participants' data. It offers an overview of the history and implications of HR strategies, employee commitment, and firm performance as research variables. It, therefore, contributes to the HR literature in order to connect employee commitment with firm performance. The study also contributes to organizational and HRM literature by analyzing the guided meditation effects of employee emotional commitment to the direct connection between HR strategies and firm performance. This work also explores an undeveloped definition of employee emotional engagement and adds to organizational research literature to investigate HR strategy's effects on firm performance in the context of Bangladesh.