Exploring Indirect HPWS-Performance Link in PSFs: A Practice-Resource-Use-Performance Linkage Mode

This longitudinal study of professional service firms (PSFs) examines the linkage mechanisms through which high performance work systems (HPWS) influence firm performance. Two intervening mechanisms are theorized and examined. They are: (1) the resources that HPWS create, and (2) the uses to which both HPWS and these resources can be put. The resources we investigate are human, social and organizational capital, all of particular importance in knowledge-based professional service firms. The two uses which the resources facilitate and enable are the exploitation of the firm’s current capabilities and client base and the exploration of new alternative opportunities. We thus theorize a linkage model that incorporates HPWS-resources-uses-performance. Results from 93 Irish accounting firms support the mediation mechanisms in our linkage model wherein resources and the uses made of them link HPWS to firm performance. Implications are presented for theory and practice.