High‐Performance Work Systems in Professional Service Firms: Examining the Practices‐Resources‐Uses‐Performance Linkage

Abstract

Professional service fi rms (PSFs) play an important role in the knowledge-based economy. Their success is highly dependent on their people, the knowledge resources they possess, and how they use these resources. However, how to systematically manage human resources to attain high performance is not fully understood. This study addresses this issue by investigating the linkage mechanisms through which high-performance work systems (HPWS) infl uence the performance of PSFs. We integrate resource-based and dynamic capability theories in order to identify and investigate two intervening mechanisms that link HR practices to fi rm performance. The fi rst mechanism is the intellectual capital resources comprising the human, social, and organizational capital that HPWS create. The second mechanism is the uses to which both HPWS and resources can be applied, operationalized as organizational ambidexterity, the simultaneous exploitation of existing knowledge and exploration of new knowledge. These mechanisms are hypothesized to link HPWS to fi rm performance in the form of a practicesresources-uses-performance linkage model. Results from a longitudinal study of 93 accounting fi rms support this linkage model. © 2015 Wiley Periodicals, Inc.Keywords: high-performance work systems; professional service fi rms; organizational resources and uses; fi rm performance; linkages model P rofessional service firms (PSFs) are knowledge intensive organizations requiring a highly educated workforce to provide customized solutions to clients (Greenwood, Li, Prakash, & Deephouse, 2005;Maister, 1993; von Nordenflycht, 2010). The primary assets of PSFs are the knowledge and capabilities embedded in their professional staff (Løwendahl, 2000). The success of PSFs such as accounting, consulting, and law firms largely depends on their human resources, although only a few studies address their human resource issues (e.g., Fu, 1991) and dynamic capability theory (Teece, Pisano, & Shuen, 1997). The RBV argues that the firm's competitive advantage lies in its valuable, rare, imperfectly imitable, and nonsubstitutable resources. HR practices themselves are not a direct source of competitive advantage. Rather, advantage derives from the contributions made by people selected, trained, and developed through such practices. In particular, it is the human and social capital that HPWS creates that provide firms the means to achieve superior competitive performance (e.g., Messersmith & Guthrie, 2010;Takeuchi, Lepak, Wang, & Takeuchi, 2007;Youndt et al., 1996). Intellectual capital resources including human capital (Becker, 1964;O'Sullivan & Sheffrin, 1998), social capital (Burt, 1992;Nahapiet & Ghoshal, 1998), and organizational capital (Subramaniam & Youndt, 2005;Youndt, Subramaniam, & Snell, 2004) are particularly important in knowledge-based PSFs. Below, we review the literature and propose specific hypotheses regarding the effects HPWS dimensions have on these distinct forms of capital.The mere possession of resources is inadequate in understanding fir...

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