EXPLORING THE IMPACT OF HIGH PERFORMANCE WORK SYSTEMS IN PROFESSIONAL SERVICE FIRMS: A PRACTICES-RESOURCES-USES-PERFORMANCE APPROACH

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Abstract

This article aims to explore how a system of human resource management (HRM) practices influence firm performance in a professional service context. It integrates multidisciplinary theory and research findings. The system of HRM practices are labeled as high performance work systems (HPWS). In this article, it is proposed that HPWS influence firm performance through two steps: (1) by creating resources of human, social and organizational capital; and (2) by efficient uses of these resources. It indicates that firms using higher level of HPWS will experience better performance. The underlying mechanism is that HPWS first promote employees’ ability, relationships, and opportunities; that is, the resources. These resources then facilitate the uses process, which is represented by 4 means: (1) sensing the changes in the external environment; (2) team formation and utilization; (3) leveraging knowledge from seniors to juniors; and (4) combining and exchanging knowledge. Uses finally lead to higher organizational performance. This approach is called the practices-resources-uses-performance linkage model. Employing this linkage process tool, managers are able to diagnose the requirements for organizational development. They can effectively adopt and implement HPWS. This article introduces a novel perspective for investigating the underlying mediating mechanisms that explain the link between HPWS and Professional Service Firm (PSF) performance.

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