The power of effective HRM and sustainable competitive advantage

The main objective of this research is to assess the power of effective HRM to gain a sustainable competitive advantage in the financial institutions of Pakistan. Specifically, HR strategic contribution and HR administrative support have been used as the key dimensions of HR effectiveness while customer satisfaction, market effectiveness, and profitability have been used as the dimensions of sustainable competitive advantage. This is a cross-sectional study with a survey from 164 senior HR professionals by using structural five-point Likert scale questionnaire. Results found that effective HR has significant power to achieve sustainable competitive advantage. HR strategic contribution and HR administrative support are significant to improve customer satisfaction, market effectiveness, and profitability. HR strategic contribution has the foremost power to improve profitability whereas HR support has the foremost power to improve customer satisfaction. Managerial implications, limitations, and directions for future research are also discussed.