A contextual, flexibility‐based model of the HR‐firm performance relationship

Abstract

PurposeThe purpose of this paper is to present a more refined and comprehensive explanation of the HR‐firm performance relationship. Based on the recent conceptual and empirical research that is grounded in attribution theory, the model posits that flexibility regarding firm's HR system is a key mediator in the focal relationship, and that environmental dynamism determines the extent to which flexibility may be required. Specifically, the model specifies that a firm's high commitment work system will have a direct influence on the flexibility of the HR system, as well as climate perceptions about commitment and performance. HR flexibility and climate will in turn influence employees' evaluative attributions regarding the effectiveness of the firm's HR system, which will in turn affect employee commitment and performance and ultimately, firm‐level performance outcomes. And finally, the model specifies that environmental dynamism will have a direct influence on HR flexibility and the resulting employee‐ and firm‐level outcomes. This explanation is designed to have broad utility in light of the adaptive requirements for firms that operate in rapidly changing and highly competitive conditions.Design/methodology/approachThis is a conceptual paper.FindingsThe proposed model provides a more comprehensive explanation of the mechanisms by which a firm's high commitment work practices may influence firm performance, and as such, offers both a diagnostic and prescriptive basis for improving and enhancing the firm's competitive position.Originality/valueThe analysis and discussion presented in this paper demonstrates the need for a broader perspective on the internal and external contingencies that influence the HR‐firm performance relationship. The proposed model addresses this need and offers a more detailed, flexibility‐based explanation of how HCWS affect individual and organizational performance outcomes. It is hoped that this expanded framework offers new insights that will help scholars and practitioners to consider the ways in which HR practices can be leveraged to promote committed, high‐performing employees that help organizations achieve sustained levels of superior performance.