Competitiveness is inevitable in highly dynamic and uncertain environments. Business strategy is concerned with how businesses achieve a competitive advantage. Its implementation involves the fit between the organization’s business strategy and its internal processes. An appropriate match enhances organizational effectiveness and generates superior performance. A strategic fit between a business strategy and a human resource strategy can help retain and motivate employees and translate into organizational performance and competitive advantage. Based on Porter’s generic strategies as business competitive strategies and an extensive literature review, this study proposes and develops three different human resource strategies. We also thoroughly designate three alternatives of reward systems that are suited to each human resource strategy. Through a close linkage among business competitive strategy, human resource strategy, and reward systems, we hope to provide mangers with directions for designing and implementing an appropriate reward systems under various business competitive strategies and help firms to create competitive advantage effectively.
Academy of Strategic Management Journal 10(2), pp.11-32