The interplay of HRM practices and financial performance: Insights from the Bangladeshi banking industry

Abstract

The current study explores the connection between Human Resource Management (HRM) practices and the financial performance of banking firms in Bangladesh. Based on the assumptions of RBV and the AMO framework, organizational culture acts as the mediator, whereas the regulatory environment and technological advancement of HRM act as moderators in relation to the effect of HRM practices on financial performance. A quantitative research approach has been followed in the present study, using stratified random sampling techniques. To collect the data, structured questionnaires have been distributed to employees across different organizational positions in the banking sector. According to the research, HRM practices have a positive impact on financial performance. However, the mediating effect of organizational culture enhances this impact. Moreover, the use of HRM technological advancements (such as software, artificial intelligence, machine learning, and an Employee Self-Service system) improves the impact of HRM practices on financial performance. The regulatory environment can either reinforce or weaken this effect, depending on the level of institutional fit. The present study makes theoretical contributions to the field of strategic HRM by considering both internal and external factors that affect HRM effectiveness in an emerging economy.