HR systems, HR departments, and perceived establishment labor productivity

• Author: Clint Chadwick,Pingshu Li
• DOI: http://doi.org/10.1002/hrm.21914
• Date: 01 November 2018
• Published date: 01 November 2018

ORIGINAL ARTICLE

HR systems, HR departments, and perceived establishment

labor productivity

Clint Chadwick

1

| Pingshu Li

2

1

School of Business, University of Kansas,

Lawrence, Kansas

2

Robert C. Vackar College of Business and

Entrepreneurship, University of Texas Rio

Grande Valley, Edinburg, Texas

Correspondence

Pingshu Li, ECOBE 222B, University of Texas

Rio Grande Valley, 1201 W. University Dr,

Edinburg, TX 78539

Email: pingshu.li@utrgv.edu

This study examines how an HR department moderates the effects of high-performance work

systems (HPWSs) on perceived establishment performance. Using a representative sample of

125 small and medium-sized establishments from the 2002 National Organizations Survey, our

results indicate a positive interaction between HPWSs and the existence of an establishment

HR department with respect to perceived establishment labor productivity. Implications for

future strategic HRM research are discussed.

KEYWORDS

high-performance work systems, HR departments, small and medium-sized enterprises

1|INTRODUCTION

Scholars in the strategic human resource management (SHRM)

stream of research have been investigating the linkages between sys-

tems of HR practices and unit-level performance for more than

20 years. The most popular type of HR system in this literature is

conceptually oriented around enhancing workers' abilities (A), moti-

vating them to apply their best efforts to furthering their organiza-

tions' goals (M), and providing workers with opportunities to do so

(O; e.g., Boxall, 2003). Hence, this approach is labeled the AMO theo-

retic perspective, and the system that most commonly operationalizes

the AMO perspective is commonly described as a “high-performance

work system”(HPWS; other common labels include “commitment-

based work system”and “high-investment HR system”). Published

SHRM research has largely reported positive linkages between

HPWSs and unit-level performance, particularly on the firm and

establishment levels of analysis. Recent meta-analyses of empirical

SHRM research have confirmed this generally positive relationship in

the extant literature (Combs, Liu, Hall, & Ketchen, 2006; Jiang, Lepak,

Hu, & Baer, 2012; Subramony, 2009).

While the prevailing thrust of SHRM research has focused on the

general effects of HPWSs, evidence of moderators of the HPWS–

unit-level performance relationship has also been a consistent part of

the published record (e.g., Chadwick, Way, Kerr, & Thacker, 2013;

Delery & Doty, 1996; Wood, Van Veldhoven, Croon, & de Menezes,

2012). One underresearched potential moderator of the HPWS–unit-

level performance relationship is the existence of a formal HR

department. HR departments may both prompt the adoption of

HPWSs when such systems can best help organizations and enhance

the effectiveness of HPWSs after their implementation. In either

event, we present arguments that the combination of HPWSs and

formal HR departments is likely to be associated with higher unit-

level performance than is an HPWS alone. Thus, this study contrib-

utes to SHRM research by examining the intersection of two hereto-

fore sparsely related streams of research: (a) research concerning the

relationship between HPWSs and unit-level performance, and

(b) research concerning the relationship of formal HRM functions to

unit-level performance. We position this research in the small and

medium-sized enterprise (SME) context, specifically in small and

medium-sized establishments. As we demonstrate below, one contri-

bution of our study is to add nuance to the small and somewhat

mixed set of empirical results for HPWSs and unit-level performance

in SMEs.

Empirically, we investigate the relationships between HPWSs

and HR departments and between HR departments and establish-

ment size with respect to perceived establishment-level labor produc-

tivity in a representative sample of 125 U.S. small and medium-sized

establishments from the 2002 panel of the National Organizations

Survey (NOS). Our results suggest that HR departments, as an addi-

tional moderator of the HPWS–firm productivity relationship, are an

important part of the general SHRM story. It is particularly significant

to investigate the intersection of HPWSs and HR departments in

SMEs, as from a cost–benefit perspective, it is a significant invest-

ment for SMEs to adopt HPWSs and HR departments, such that the

DOI: 10.1002/hrm.21914

Hum Resour Manage. 2018;57:1415–1428. wileyonlinelibrary.com/journal/hrm © 2018 Wiley Periodicals, Inc. 1415