Exploring the relationships between HPWS, organizational ambidexterity and firm performance in Chinese professional service firms

Abstract

Purpose– The purpose of this paper is to better understand the indirect link between high-performance work systems (HPWSs) and firm performance in Chinese professional service firms (PSFs) by investigating the mediating role of organizational ambidexterity, i.e. a firm’s capability to simultaneously explore new ideas and exploit existing resources.Design/methodology/approach– Data were collected from 120 Chinese accounting firms. The authors used hierarchical and polynomial regression analyses to test their hypotheses.Findings– The proposed positive link between the HPWS and organizational ambidexterity was found. Further, the results showed a non-linear relationship between organizational ambidexterity and organizational performance.Research limitations/implications– The present study is limited in terms of small sample size, single industry and self-report data.Practical implications– Firms which reported a higher level of HPWS demonstrated better performance due to their organizational capability to explore new ideas and exploit existing resources. In the Chinese context, firms that had high levels of exploration (exploring new resources) and exploitation (exploiting existing resources) or that had a high level of exploration experienced higher performance. The authors can conclude from these findings that without exploration, organizational success is difficult to achieve for PSFs.Originality/value– This is the first study examining the underlying mechanism of organizational ambidexterity in the indirect relationship between HPWS and firm performance in Chinese PSFs. It advances the authors understanding of HPWS and firm performance relationship in an Eastern country and an emerging context of PSFs. This is also the first study to use polynomial regression to operationalize organizational ambidexterity.