Hostname: page-component-586b7cd67f-2brh9 Total loading time: 0 Render date: 2024-11-26T16:52:33.079Z Has data issue: false hasContentIssue false
  • English
  • Français

Human Resource Practices and Firm Performance in China: The Moderating Roles of Regional Human Capital Quality and Firm Innovation Strategy

Published online by Cambridge University Press:  05 June 2015

Xiaobei Li ,
Xin Qin ,
Kaifeng Jiang ,
Sanbao Zhang  and
Fei-Yi Gao
Xiaobei Li*
Affiliation:
East China University of Science and Technology, China Peking University, China
Xin Qin
Affiliation:
Sun Yat-sen University, China
Kaifeng Jiang
Affiliation:
University of Notre Dame, USA
Sanbao Zhang*
Affiliation:
Wuhan University, China
Fei-Yi Gao*
Affiliation:
Southwestern University of Finance and Economics, China
*
Corresponding authors: [email protected], [email protected], and [email protected]
Corresponding authors: [email protected], [email protected], and [email protected]
Corresponding authors: [email protected], [email protected], and [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

We conducted two studies to investigate the contingent role of regional human capital quality (i.e., the knowledge, skills, and abilities of the collective workforce in a region) in the relationship between firm-level human resource (HR) practices (i.e., practices focusing on employees’ human capital development) and firm performance in China. Drawing upon human capital theory, we hypothesized that the human capital–enhancing HR practices and regional human capital quality have a substitutive effect on firm performance. Study 1 uses a World Bank survey of 9,125 firms in 30 provinces. We found that the human capital–enhancing HR practices relate more strongly to firm performance when regional human capital quality was lower than when it was higher. Study 2 used a sample of 203 firms across seven provinces. We found similar results. We further hypothesized and found that the substitutive effect of regional human capital quality was stronger when a firm adopted an innovation strategy. Our findings provide new evidence for the contingency perspective of strategic HR management and highlight the importance of matching HR practices with local labor quality conditions and the business strategy of the firm.

Keywords

firm performancehuman capital–enhancing HR practicesinnovation strategyregional human capitalstrategic HR management
Type
Articles
Information
Management and Organization Review , Volume 11 , Issue 2 , June 2015 , pp. 237 - 261
Copyright
Copyright © The International Association for Chinese Management Research 2015 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Aiken, L. S., & West, S. G. 1991. Multiple regression: Testing and interpreting interactions. Newbury Park, CA: Sage.Google Scholar
Akhtar, S., Ding, D. Z., & Ge, G. L. 2008. Strategic HRM practices and their impact on company performance in Chinese enterprises. Human Resource Management, 47 (1): 15–32.CrossRefGoogle Scholar
Amabile, T. M., Conti, R., Coon, H., Lazenby, J., & Herron, M. 1996. Assessing the work environment for creativity. Academy of Management Journal, 39 (5): 1154–1184.CrossRefGoogle Scholar
Andersen, K. K., Cooper, B. K., & Zhu, C. J. 2007. The effect of SHRM practices on perceived firm financial performance: Some initial evidence from Australia. Asia Pacific Journal of Human Resources, 45 (2): 168–179.CrossRefGoogle Scholar
Arthur, J. B. 1994. Effects of human resource systems on manufacturing performance and turnover. Academy of Management Journal, 37 (3): 670–687.CrossRefGoogle Scholar
Batt, R., & Colvin, A. J. S. 2011. An employment systems approach to turnover: Human resources practices, quits, dismissals and performance. Academy of Management Journal, 54 (4): 695–717.CrossRefGoogle Scholar
Becker, G. S. 1964. Human capital: A theoretical and empirical analysis. Chicago: University of Chicago Press.Google Scholar
Becker, G. S. 1975. Human capital. Chicago, IL: University of Chicago Press.Google Scholar
Benson, J., & Zhu, Y. 2002. The emerging external labor market and the impact on enterprise's human resource development in China. Human Resource Development Quarterly, 13 (4): 449–466.CrossRefGoogle Scholar
Bryk, A. S., & Raudenbush, S. W. 1992. Hierarchical linear models. Newbury Park, CA: Sage.Google Scholar
Chan, L. L. M., Shaffer, M. A., & Snape, E. 2004. In search of sustained competitive advantage: The impact of organizational culture, competitive strategy and human resource management practices on firm performance. The International Journal of Human Resource Management, 15 (1): 17–35.CrossRefGoogle Scholar
Child, J., & Tse, D. K. 2001. China's transition and its implications for international business. Journal of International Business Studies, 32 (1): 5–21.CrossRefGoogle Scholar
Chiu, R. K., Luk, V. W. M., & Tang, T. L. P. 2002. Retaining and motivating employees: Compensation preferences in Hong Kong and China. Personnel Review, 31 (4): 402–431.CrossRefGoogle Scholar
Coff, R. W. 2002. Human capital, shared expertise, and the likelihood of impasse on corporate acquisitions. Journal of Management, 28 (1): 107–128.CrossRefGoogle Scholar
Combs, J., Liu, Y., Hall, A., & Ketchen, D. 2006. How much do high-performance work practices matter? A meta-analysis of their effects on organizational performance. Personnel Psychology, 59 (3): 501–528.CrossRefGoogle Scholar
Cooke, F. L. 2005. Vocational and enterprise training in China: Policy, practice and prospect. Journal of the Asia Pacific Economy, 10 (1): 25–55.CrossRefGoogle Scholar
Cooke, F. L. 2011. Labour market disparities and inequalities. In Sheldon, P., Kim, S., Li, Y., & Warner, M. (Eds.), China's changing workplace: Dynamism, diversity and disparity: 259–276. London: Routledge.Google Scholar
Cooke, F. L., & Saini, D. S. 2010. (How) Does the HR strategy support an innovation oriented business strategy? An investigation of institutional context and organizational practices in Indian firms. Human Resource Management, 49 (3): 377–400.CrossRefGoogle Scholar
Crook, T. R., Todd, S. Y., Combs, J. G., Woehr, D. J., & Ketchen, J. D. Jr. 2011. Does human capital matter? A meta-analysis of the relationship between human capital and firm performance. Journal of Applied Psychology, 96 (3): 443–456.CrossRefGoogle Scholar
Datta, D. K., Guthrie, J. P., & Wright, P. M. 2005. Human resource management and labor productivity: Does industry matter? Academy of Management Journal, 48 (1): 135–145.CrossRefGoogle Scholar
Dawson, J. F., & Richter, A. W. 2006. Probing three-way interactions in moderated multiple regression: Development and application of a slope difference test. Journal of Applied Psychology, 91 (4): 917–926.CrossRefGoogle ScholarPubMed
Delery, J. E. 1998. Issues of fit in strategic human resource management: Implications for research. Human Resource Management Review, 8 (3): 289–309.CrossRefGoogle Scholar
Delery, J. E., & Doty, H. K. 1996. Modes of theorizing in strategic human resource management: Test of universalistic, contigency and configurational performance. Academy of Management Journal, 39 (4): 802–835.CrossRefGoogle Scholar
Ding, D. Z., & Akhtar, S. 2001. The organizational choice of human resource management practices: A study of Chinese enterprises in three cities in the PRC. International Journal of Human Resource Management, 12 (6): 946–964.CrossRefGoogle Scholar
Eddleston, K. A., Kellermanns, F. W., & Sarathy, R. 2008. Resource configuration in family firms: Linking resources, strategic planning and technological opportunities to performance. Journal of Management Studies, 45 (1): 26–50.CrossRefGoogle Scholar
Evans, M. G. 1985. A Monte Carlo study of the effects of correlated method variance in moderated multiple regression analysis. Organizational Behavior and Human Decision Processes, 36 (3): 305–323.CrossRefGoogle Scholar
Fleisher, B. M., Hu, Y., Li, H., & Kim, S. 2011. Economic transition, higher education and worker productivity in China. Journal of Development Economics, 94 (1): 86–94.CrossRefGoogle Scholar
Fleisher, B. M., Li, H., & Zhao, M. Q. 2010. Human capital, economic growth, and regional inequality in China. Journal of Development Economics, 92 (2): 215–231.CrossRefGoogle Scholar
Fletcher, C. 2001. Performance appraisal and management: The developing research agenda. Journal of Occupational and Organizational Psychology, 74 (4): 473–487.CrossRefGoogle Scholar
Gardner, T. M., Wright, P. M., & Moynihan, L. M. 2011. The impact of motivation, empowerment, and skill-enhancing practices on aggregate voluntary turnover: The mediating effect of collective affective commitment. Personnel Psychology, 64 (2): 315–350.CrossRefGoogle Scholar
Heckman, J. J. 2005. China's human capital investment. China Economic Review, 16 (1): 50–70.CrossRefGoogle Scholar
Hesketh, A., & Fleetwood, S. 2006. Human resource management-performance research: Under-theorized and lacking explanatory power. International Journal of Human Resource Management, 17 (12): 1977–1993.Google Scholar
Hofmann, D. A., & Gavin, M. B. 1998. Centering decisions in hierarchical linear models: Implications for research in organizations. Journal of Management, 24 (5): 623–641.CrossRefGoogle Scholar
Huang, T. C. 2001. The effects of linkage between business and human resource management strategies. Personnel Psychology, 30 (2): 132–145.Google Scholar
Huselid, M. A. 1995. The impact of human resource management practices on turnover, productivity, and corporate financial performance. Academy of Management Journal, 38 (3): 635–672.CrossRefGoogle Scholar
Inkpen, A. C., & Pien, W. 2006. An examination of collaboration and knowledge transfer: China-Singapore Suzhou Industrial Park. Journal of Management Studies, 43 (4): 779–811.CrossRefGoogle Scholar
Jackson, S. E., & Schuler, R. S. 1995. Understanding human resource management in the context of organizations and their environments. In Rosenzweig, M. R. & Porter, L. W. (Eds.), Annual review of psychology, vol. 46: 237–264. Palo Alto, CA: Annual Reviews.Google Scholar
Ji, L., Tang, G., Wang, X., Yan, M., & Liu, Z. 2012. Collectivistic-HRM, firm strategy and firm performance: An empirical test. International Journal of Human Resource Management, 23 (1): 190–203.CrossRefGoogle Scholar
Jiang, K., Lepak, D. P., Han, K., Hong, Y., Kim, A., & Winkler, A.-L. 2012a. Clarifying the construct of human resource systems: Relating human resource management to employee performance. Human Resource Management Review, 22 (2): 73–85.CrossRefGoogle Scholar
Jiang, K., Lepak, D. P., Hu, J., & Baer, J. C. 2012b. How does human resource management influence organizational outcomes? A meta-analytic investigation of mediating mechanisms. Academy of Management Journal, 55 (6): 1264–1294.CrossRefGoogle Scholar
Katou, A. A. 2010. Test of a causal HRM-performance linkage model: Evidence from the Greek manufacturing sector. Applied Human Resource Management Research, 12 (1): 1–16.Google Scholar
Kwon, K., & Rupp, D. E. 2013. High-performer turnover and firm performance: The moderating role of human capital investment and firm reputation. Journal of Organizational Behavior, 34 (1): 129–150.CrossRefGoogle Scholar
Lam, A. 1997. Embedded firms, embedded knowledge: Problems of collaboration and knowledge transfer in global cooperative ventures. Organization Studies, 18 (6): 973–996.CrossRefGoogle Scholar
Laurin, K., Fitzsimons, G. M., & Kay, A. C. 2011. Social disadvantage and the self-regulatory function of justice beliefs. Journal of Personality and Social Psychology, 100 (1): 149–171.CrossRefGoogle ScholarPubMed
Law, K. S., Tse, D. K., & Zhou, N. 2003. Does human resource management matter in a transitional economy? China as an example. Journal of International Business Studies, 34 (3): 255–265.CrossRefGoogle Scholar
Lee, F. H., Lee, T. Z., & Wu, W. Y. 2010. The relationship between human resource management practices, business strategy and firm performance: Evidence from steel industry in Taiwan. International Journal of Human Resource Management, 21 (9): 1351–1372.CrossRefGoogle Scholar
Lengnick-Hall, M. L., Lengnick-Hall, C. A., Andrade, L. S., & Drake, B. 2009. Strategic human resource management: The evolution of the field. Human Resource Management Review, 19 (2): 64–85.CrossRefGoogle Scholar
Levy, M. 2009. WEB 2.0 implications on knowledge management. Journal of Knowledge Management, 13 (1): 120–134.CrossRefGoogle Scholar
Lepak, D. P., & Snell, S. A. 1999. The human resource architecture: Toward a theory of human capital allocation and development. Academy of Management Review, 24 (1): 31–48.CrossRefGoogle Scholar
Liang, X., Marler, J. H., & Cui, Z. 2012. Strategic human resource management in China: East meets West. Academy of Management Perspectives, 26 (2): 55–70.CrossRefGoogle Scholar
Liao, Y. S. 2005. Business strategy and performance: The role of human resource management control. Personnel Review, 34 (3): 294–309.CrossRefGoogle Scholar
Kim, S., & Wright, P. M. 2011. Putting strategic human resource management in context: A contextualized model of high commitment work systems and its implications in China. Management and Organization Review, 7 (1): 153–174.CrossRefGoogle Scholar
Michie, J., & Sheehan-Quinn, M. 2001. Labour market flexibility, human resource management and corporate performance. British Journal of Management, 12 (4): 287–306.CrossRefGoogle Scholar
National Bureau of Statistics (NBS). 2003. China Statistical Yearbook (Vol. 22). Beijing, China: China Statistics Press.Google Scholar
National Bureau of Statistics (NBS). 2004. China Statistical Yearbook (Vol. 23). Beijing, China: China Statistics Press.Google Scholar
National Bureau of Statistics (NBS). 2005. China Statistical Yearbook (Vol. 24). Beijing, China: China Statistics Press.Google Scholar
National Bureau of Statistics (NBS). 2006. China Statistical Yearbook (Vol. 25). Beijing, China: China Statistics Press.Google Scholar
National Bureau of Statistics (NBS). 2007. China Statistical Yearbook (Vol. 26). Beijing, China: China Statistics Press.Google Scholar
National Bureau of Statistics (NBS). 2008. China Statistical Yearbook (Vol. 27). Beijing, China: China Statistics Press.Google Scholar
Ng, Y. C., & Siu, N. Y. M. 2004. Training and enterprise performance in transition: Evidence from China. International Journal of Human Resource Management, 15 (4): 878–894.CrossRefGoogle Scholar
Paauwe, J., & Boselie, P. 2003. Challenging ‘strategic HRM’ and the relevance of the institutional setting. Human Resource Management Journal, 13 (3): 56–70.CrossRefGoogle Scholar
Ployhart, R. E., & Moliterno, T. P. 2011. Emergence of the human capital resource: A multilevel model. Academy of Management Review, 36 (1): 127–150.CrossRefGoogle Scholar
Podsakoff, P. M., MacKenzie, S. B., & Podsakoff, N. P. 2012. Sources of method bias in social science research and recommendations on how to control it. Annual Review of Psychology, 65: 539–569.CrossRefGoogle Scholar
Raudenbush, S. W. 1989. ‘Centering’ predictors in multilevel analysis: Choices and consequences. Multilevel Modeling Newsletter, 1 (2): 10–12.Google Scholar
Roper, S., Hewitt-Dundas, N., & Love, J. H. 2004. An ex ante evaluation framework for the regional benefits of publicly supported R&D projects. Research Policy, 33 (3), 487–509.CrossRefGoogle Scholar
Rosenthal, S. S., & Strange, W. C. 2008. The attenuation of human capital spillovers. Journal of Urban Economics, 64 (2): 373–389.CrossRefGoogle Scholar
Schmidt, C. 2011. The battle for China's talents. Harvard Business Review, March: 25–27.Google Scholar
Schuler, R. S., & Jackson, S. E. 1987. Linking competitive strategies with human resource management practices. Academy of Management Executive, 1 (3): 207–219.Google Scholar
Sheldon, P., Kim, S., Li, Y., & Warner, M. 2011. China's changing workplace: Dynamism, diversity and disparity. London: Routledge.CrossRefGoogle Scholar
Shipton, H., West, M. A., Dawson, J., Birdi, K., & Patterson, M. 2006. HRM as a predictor of innovation. Human Resource Management Journal, 16 (1): 3–27.CrossRefGoogle Scholar
Siemsen, E., Roth, A., & Oliveira, P. 2010. Common method bias in regression models with linear, quadratic, and interaction effects. Organizational Research Methods, 13 (3): 456–476.CrossRefGoogle Scholar
Solansky, S. T. 2010. The evaluation of two key leadership development program components: Leadership skills assessment and leadership mentoring. Leadership Quarterly, 21 (4): 675–681.CrossRefGoogle Scholar
Su, Z.-X., & Wright, P. M. 2012. The effective human resource management system in transitional China: A hybrid of commitment and control practices. International Journal of Human Resource Management, 23 (10): 2065–2086.CrossRefGoogle Scholar
Subramony, M. 2009. A meta-analytic investigation of the relationship between HRM bundles and firm performance. Human Resource Management, 48 (5): 745–768.CrossRefGoogle Scholar
Teo, S. T. T., Le Clerc, M., & Galang, M. C. 2011. Human capital enhancing HRM systems and frontline employees in Australian manufacturing SMEs. International Journal of Human Resource Management, 22 (12): 2522–2538.CrossRefGoogle Scholar
Warner, M. 2008. Reassessing human resource management ‘with Chinese characteristics’: An overview. International Journal of Human Resource Management, 19 (5): 771–801.CrossRefGoogle Scholar
Warner, M. 2012. Whither Chinese HRM? Paradigms, models and theories. International Journal of Human Resource Management, 23 (19): 3943–3963.CrossRefGoogle Scholar
Wei, L. Q., & Lau, C. M. 2008. The impact of market orientation and strategic HRM on firm performance: The case of Chinese enterprises. Journal of International Business Studies, 39 (6): 980–995.CrossRefGoogle Scholar
Wei, L. Q., & Lau, C. M. 2010. High performance work systems and performance: The role of adaptive capability. Human Relations, 63 (10): 1487–1511.CrossRefGoogle Scholar
Wu, A. and Wei, J. (2013), Effects of Geographic Search on Product Innovation in Industrial Cluster Firms in China. Management and Organization Review, 9 (3): 465–487.CrossRefGoogle Scholar
Youndt, M. A., Snell, S. A., Dean, J. W. Jr., & Lepak, D. P. 1996. Human resource management, manufacturing strategy, and firm performance. Academy of Management Journal, 39 (4): 836–866.CrossRefGoogle Scholar
Zahra, S. A., & Covin, J. G. 1993. Business strategy, technology policy and company performance. Strategic Management Journal, 14 (6): 451–478.CrossRefGoogle Scholar
Zhang, S., & Zhang, Z. 2012. Regional institutions, CEO managerial discretion and firm risk taking: Evidence from high-tech firms across 30 provinces in China. Management World, 4: 101–114 [in Chinese].Google Scholar
Zhao, S., & Du, J. 2012. Thirty-two years of development of human resource management in China: Review and prospects. Human Resource Management Review, 22 (3): 179–188.CrossRefGoogle Scholar
Zhu, C. J., Zhang, M., & Shen, J. 2012. Paternalistic and transactional HRM: The nature and transformation of HRM in contemporary China. International Journal of Human Resource Management, 23 (19): 3964–3982.CrossRefGoogle Scholar
Supplementary material: File

Li supplementary material

Translated abstracts

Download Li supplementary material(File)
File 14.8 KB