High performance work practices and firm performance: evidence from the pharmaceutical industry in China

Abstract

The current study analyzed the relationship of high performance work practices and firm performance in a sample of pharmaceutical companies in China. We found that the human resource management index composed of high performance work practices such as extensive training, participation, detailed job definition, result-oriented performance appraisal, internal career opportunities, and profit sharing as reported by the human resource or finance managers was significantly related to firm's market performance as evaluated by the firm's general managers or marketing directors. Results also showed that the positive effect of the HRM index on firm's performance was influence by innovation strategy in negative direction. Results extend our knowledge about strategic human resource management theory and suggest the need for further studies to identify other contingencies that may attenuate the universalistic nature of these valued practices.