HIGH PERFORMANCE WORK PRACTICES AND HUMAN RESOURCE MANAGEMENT EFFECTIVENESS: SUBSTITUTES OR...
The human resource management literature has implicitly treated high performance work practices (HPWPs) and human resources management (HRM) effectiveness as substitutes for one another with respect to their relationship
with firm performance. We contend that HPWPs and HRM effectiveness act both as substitutes and as complements. Main effects reveal that only human resource management effectiveness affects market performance and that HPWPs affect innovation. However, interacting HPWPs with HRM effectiveness positively relates to both market performance and innovation in support of our hypothesis. The results suggest that effective HRM can offset HP WP's expense and that HPWPs can enhance the flexibility of effective HRM systems.
High performance work practices (HPWPs), through significant investment in employees, have been touted as a way to make organizations more flexible and effective. Often HPWPs are viewed as an alternative to traditional productions systems that are firmly rooted in Fredrick Taylor's scientific management and subsequent Fordist principles. However, we contend that having effective human resource structures (HRM effectiveness) can enhance the return on HPWPs because HPWPs require a heavy investment in human capital, that is lost if the firm cannot attract and retain quality employees. Conversely, effective HRM systems can benefit from the innovative capabilities of HPWP that enhance the organization's ability to adapt and change. Hence, we address the question, "Are HPWPs and effective HRM systems complements or substitutes?" We empirically test this question using data from the banking industry. First, we review the literature that supports ...