Can high performance work systems really lead to better performance?

Abstract

Purpose This study presents a conceptual scheme concerning the core constituents of high‐performance work system (HPWS) and examines their effects on firm performance. Design/methodology/approach This study proposes a conceptual scheme incorporating the universalistic and the configurational perspectives of strategic human resource management. The effect of HPWS on firm performance is empirically tested using data collected from publicly listed companies in Taiwan, as well as multinational companies' branch offices in Taiwan. Findings Initial factor analysis on HPWS practices supports this conceptual scheme. Using the structural equation modeling technique (AMOS 4.0) better‐performing firms were found to invest in more sophisticated HRM practices, which further enhanced organizational performance. Research limitations/implications Surveys conducted in other countries can expand the external validity of this study's findings. Originality/value While most previous research on HPWS involves regression‐like analyses, this study tries a different approach, with the structural modeling technique, to verify HPWS' relationship with firm performance.