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Faculty Insights

Do High Performance Human Resource Work Systems Work Equally Well in Different Parts of the World?

By Wisconsin School of Business

December 9, 2014

High performance work practices (HPWPs) are human resource (HR) practices designed to increase business performance by enhancing employee ability, motivation, and opportunity to contribute (AMO). HPWPs include, for example, selectivity in staffing, investments in training, pay for performance, and employee participation in decisions. A high performance work system (HPWS) includes combinations or bundles of multiple HPWPs that are hypothesized to create mutually reinforcing, synergistic effects. Research has documented a positive and meaningful relationship between the use of HPWSs and business (establishment, firm) performance. In a global economy, an important question is whether HR practices that work in one country work the same way in other countries.

My colleagues Tanja Rabl of the Technical University of Kaiserslautern, Germany; Mevan Jayasinghe of Michigan State University (and a recent UW-Madison Ph.D. graduate); Torsten M. Kühlmann of the University of Bayreuth, Germany; and I conducted the first systematic assessment of this question. We wanted to understand how the effectiveness of high performance work systems (HPWSs) varies across countries.

We developed a conceptual framework based primarily on national culture perspectives that also incorporated the role of managerial discretion (cultural tightness-looseness and institutional flexibility). Specifically, we asked: Are HPWSs more effective when they fit the national culture and the institutional environment of a country? According to national culture perspectives, HPWSs should work better (i.e., the HPWS-business performance effect size should be more positive) in countries where they fit the national culture, which are hypothesized to be countries lower on power distance, lower on collectivism, and higher on performance orientation.

We conducted a meta-analysis of 156 (including 108 non-United States) HPWS-business performance effect sizes reported in previous studies, based on a total sample of 35,767 firms/establishments in 29 countries. We found that the mean HPWS-business performance effect size was positive overall (corrected r = .28) and positive in every country, not just in countries thought to have compatible national cultures and/or a greater degree of institutional flexibility.

In the case of national culture, the HPWS-business performance relationship was, on average, actually more strongly positive in countries where the degree of a priori hypothesized consistency or fit between an HPWS and national culture (according to standard national culture logic) was lower. A caveat is that in the case of tight national cultures, greater a priori fit of an HPWS with national culture was associated with a somewhat more positive HPWS-business performance effect size. However, it is important to note that even in tight national cultures and in national cultures high on power distance and low on performance orientation, the HPWS-business performance effect size is positive. Indeed, even in tight national cultures, greater fit between national culture and HPWS resulted in effect sizes that were only slightly more positive than those observed when fit was expected a priori to be lower. In loose cultures (and in cultures that were neither tight nor loose), less a priori hypothesized consistency between an HPWS and national culture was associated with higher HPWS effectiveness.

We conclude that, contrary to national culture-based logic, HPWSs do not, on average, work better when they fit the national culture. Likewise, we found no evidence that the HPWS-business performance effect size was more positive in countries where HPWSs were hypothesized to better fit the institutional environment (i.e., countries having higher institutional flexibility). Thus, our main results suggest that national culture and institutional flexibility do not, on average, constrain the effectiveness of HPWSs.

In fact, although we found moderating effects of national culture, these effects were mostly the opposite of those hypothesized a priori using standard national culture-based logic. In other words, the HPWS-business performance effect size was, contrary to national culture-based expectations, more strongly positive in countries high on power distance and high on collectivism. The effect size was also more strongly positive in low performance orientation countries, again contrary to conventional national culture-based logic, but the difference was not statistically significant.

In summary, our findings suggest that management practices in the form of HPWSs have very similar degrees of effectiveness regardless of the country and its national culture and institutional flexibility.

Source Article: Rabl, T., Jayasinghe, M., Gerhart, B. &. Kühlmann, T. A. (2014). Meta-Analysis of Country Differences in the High Performance Work System-Business Performance Relationship: The Roles of National Culture and Managerial Discretion. Journal of Applied Psychology, 99, 1011-1041.