Strategic HRM and Firm Performance: Mediating Role of Knowledge Management Capacity and Innovation Performance

The purpose of the current study is to investigate the linkage between strategic HRM (SHRM) and firm performance through knowledge management capability and innovation performance. Primary data were gathered from 624 employees working in 252 Indian firms. Using Model 6 of PROCESS macro, a serial mediation model was estimated to analyse the proposed relationships between SHRM, knowledge management capability, innovation performance and firm performance. The study has revealed that the use of SHRM practices which include selection, training, appraisal, rewards and empowerment results in enhanced knowledge management capability, improved innovation performance and heightened firm performance. Further, the results establish that knowledge management capability and innovation performance act as sequential mediators in linking SHRM to firm performance.