The Influence of HR Practices on Business Strategy and Firm Performance : The Case of Banking Industry in Iran

This paper attempts to examine the influence of six principal Human Resource (HR) practices — training and development, teamwork, incentives, HR planning, employment security, and performance appraisal — on the relationship between business strategy and firm performance by using data obtained from private banks in the Iranian city, Tabriz. Porter's generic strategies are used to measure business strategy and balanced scorecard is applied for measuring organizational performance. The results show that there is a close relationship between business strategies and HR practices; HR practices have a positive effect on firm performance; business strategy has a positive effect on organizational performance, and also there is a positive relationship between integrated HR practices and business strategy and firm performance. Therefore, it could be concluded that applying suitable HR practices corresponding to firms' strategies will result in improving organizational performance