High-performance work systems and organizational performance across societal cultures
Ali Dastmalchian1 , Nick Bacon2 , Nicola McNeil3 , Claudia Steinke4 , Paul Blyton5 , Medha Satish Kumar1 , Secil Bayraktar6 , Werner AuerRizzi7 , Ali Ahmad Bodla8 , Richard Cotton9 , Tim Craig10, Behice Ertenu11, Mohammad Habibi12, Heh Jason Huang13, Havva Pınar I˙mer14, Che Ruhana Isa15, Ayman Ismail16, Yuan Jiang17, Hayat Kabasakal11, Carlotta Meo Colombo18, Sedigheh Moghavvemi19, Tuheena Mukherjee20, Ghazali Bin Musa21, Philip Sugai22, Ningyu Tang17, Troung Thi Nam Thang23 and Renin Varnali11
Journal of International Business Studies
Keywords
high-performance work systems; societal culture; cross-cultural management; organizational performance
INTRODUCTION
Convergence towards best practice in management across different national and cultural settings remains a central debate in the International Business (IB) and Cross-Cultural Management (CCM) literature. An important stream of research has focused on whether human resource management (HRM) practices are converging towards a globally recognized best-practice approach (Edwards, Sa´nchez-Manges, Jalette, Lavelle, & Minbaeva, 2016; Farndale, Brewster, Ligthart, & Poutsma, 2017; Pudelko & Harzing, 2007). Central to this issue is whether, in different countries, organizations with technically superior HRM best practices outperform their competitors, suggesting an economic imperative towards convergence. Companies are offered contrasting advice regarding the effectiveness of HRM practices in different countries from two opposite perspectives – the universalistic perspective (‘best practice’) implies convergence, and the contingency perspective (‘best fit’) continued divergence (Festing, 2012). Our study therefore explores whether, in markedly different countries, organizations that have implemented HRM best practices report enhanced performance (the universalistic perspective), or alternatively whether societal culture moderates the relationship between HRM best practices and organizational performance (the contingency perspective).
The universalistic perspective has produced compelling large-scale and meta-analytic evidence of a positive association between organizational performance and a set of complementary best practices that comprise high-performance work systems (HPWS) (Combs, Liu, Hall, & Ketchen, 2006; Wright & Ulrich, 2017). In the last 20 years, many single-country studies have reproduced these findings and indicate convergence towards a universalistic HPWS–organizational performance relationship (Bae, Chen, & Lawler, 1998; Rabl, Jayasinghe, Gerhart, & Ku¨hlmann, 2014). The conclusion drawn is that organizations in all countries should benefit from adopting HPWS to enhance financial performance.
The alternative contingency perspective emphasizes cross-national variation in the effectiveness of individual HRM best practices. Focusing on isolated HRM practices such as performance appraisals or flexible work arrangements, rather than assessing a company’s overall HRM system, studies report that best practices are not associated with higher levels of employee commitment and organizational performance in all countries (Newman & Nollen, 1996; Peretz & Fried, 2012; Peretz, Fried, & Levi, 2018). These findings are consistent with GLOBE’s culturally endorsed theory of leadership (CLT) that highlights the influence of societal culture on the way organizations are structured and managed (House, Hanges, Javidan, Dorfman, & Gupta, 2004). The implication is that organizations should adopt HRM practices that ‘best fit’ with societal culture to enhance performance, rather than socalled ‘best practices’ (Aycan, 2005).
Both perspectives have limitations this paper seeks to address. The universalistic perspective provides impressive cumulative evidence, but to date has relied on single-country studies using a wide range of different measures (Combs et al., 2006). We lack analysis of primary data from large cross-national samples that use standardized measures of HPWS and organizational performance to assess these claims. In contrast, contingency arguments remain theoretically compelling, but the empirical support is weaker given the absence of large-scale and meta-analytic evidence. These studies also focus on individual practices to the neglect of the broader HRM system, and rarely assess ultimate strategic outcomes such as financial performance.
Addressing these limitations empirically, we develop cross-national primary data to examine whether societal culture, the key aspect of national context emphasized in the IB/CCM literature, moderates the relationship between HPWS and organizational performance. This involved the collection of primary and extensive matched employer–employee data, using consistent measures at workplace-level, from 387 organizations and 7187 employees in 14 diverse countries.
Our study makes two theoretical contributions. First, we propose that societal culture may moderate the effectiveness of individual HRM best practices (the contingency perspective), but not the effectiveness of HRM practices combined in HPWS (the universalistic perspective). We suggest isolated HRM practices do not increase workforce certainty, clarity, and direction. In such circumstances, GLOBE’s CLT suggests employees rely on decisionmaking heuristics provided by societal culture to interpret organizational events (House et al., 2004). In contrast, complementary practices in HPWS send clear and reinforced leadership messages to increase workforce certainty, clarity, and direction. HPWS may therefore outweigh the influence of societal culture on workforce attitudes, behaviors, and job performance.
Second, we draw on the ability–motivation– opportunity (AMO) model that suggests organizations may usefully implement bundles of combined HRM practices – skill-enhancing, motivation-enhancing, and opportunity-enhancing practices. We propose bundles of AMO practices have theoretically distinct roles in sending clear and reinforced leadership messages: skill-enhancing practices clarify human capital requirements (the types of employees hired and skills required); motivationenhancing practices reinforce productive role behaviors; and opportunity-enhancing practices encourage high-involvement. We therefore also consider whether complementary bundles of AMO practices outweigh the influence of societal culture and enhance organizational performance in diverse countries