The impact of flexibility-enhancing human resource management practices on firm adaptability : the meidiating [sic] role of absorptive capacity

A firm’s strategic human resource management (SHRM) system has two objectives. One is to promote fit, i.e., the fit between HR system subcomponents (e.g., Arthur, 1994) or that between HR system and firm strategy (e.g., Arthur, 1992) or environmental factors (e.g., Datta, Guthrie, & Wright, 2005). Such a fit can improve firm performance such as productivity (Ichniowski, Shaw, & Prennushi, 1997; MacDuffie, 1995), climate (Jaw & Liu, 2003; Rogg, Schmidt, Shull, & Schmitt, 2001), top management team networking building performance (Collins & Clark, 2003), and employee commitment (Whitener, 2001). However, very few studies examined SHRM from another perspective, i.e., to promote flexibility or adaptability (Barney & Wright, 1998; Lado & Wilson, 1994; Wright & Snell, 1998). According to Wright and Snell (1998), in a stable and predicable environment, fit can be achieved through HR systems that focus on developing a human capital pool with a narrow range of skills and that elicit a narrow range of employee behavior. In contrast, in a dynamic and unpredictable environment, HR flexibility becomes relatively important because to regain fit organizations have to use HR systems that promote the development of a human capital pool possessing a broad range of skills and that are able to engage in a wide variety of behavior. In this dissertation, I responded to Wright and Snell’s (1998) theoretical call for a measure of HR flexibility and developed and validated a concept of “flexibility-enhancing HRM practices”, and examined the impacts of flexibility-enhancing HRM practices on firm adaptive performance, indicated by responsiveness, radical innovativeness, and incremental innovativeness. I further investigated the role of absorptive capacity in mediating the flexibility-enhancing HRM practices-firm adaptability link. Two pilot studies provided preliminary evidence on the factor structure and criterion-related validity of flexibility-enhancing HRM practices. The dissertation main study, Study 3, replicated the factor structure and found significant impacts of flexibility-enhancing HRM practices on firm adaptive performance. Keywords: flexibility-enhancing HRM practices, firm adaptability, absorptive capacity