Rethinking the relationship between high-performance work systems and firm performance: A meta-analysis

In the highly competitive global marketplace, organisations are paying increasing attention to the formation and sustention of competitive advantages through the enhancement of human capital. High-performance work system (HPWS), a synergised system of human resource management (HRM) practices, has been commonly recognised as a useful tool to improve firm performance (FP) to support the competitiveness of businesses. This study examines the HPWS-FP relationship using the quantitative research technique of meta-analysis. The study analyses 192 primary studies, and contributes to the extant literature in four aspects. Firstly, it confirms a positive relationship between HPWS and FP. Secondly, in response to the recent call for investigating country-level factors that affect the HPWS-FP relationship, the study examines the role of country of origin in moderating the HPWS-FP relationship, and finds that the positive HPWS-FP relationship is stronger in developing countries than in developed countries. Thirdly, the study finds that the HPWS-FP relationship is stronger when operational measures are used as FP indicators than when financial measures are used as FP indicators. Lastly, the study looks into detailed individual components of HPWS, and finds that training and development practice is the most robust component which plays a vital role in influencing the HPWS-FP relationship. The study discusses implications of these V findings for firm managers, including 1) firms need to make great efforts to develop HPWS to stay competitive; 2) firms in developing countries have a latecomer advantage in leveraging HPWS to enhance performance; 3) firms need to focus on the long-term rather than short-term performance impact in developing HPWS; and 4) firms must place a great emphasis on employees training and development practices in developing HPWS, and make significant investments in this area. The study concludes by pointing to limitations of these findings, and highlighting some directions for future research