Abstract

The use of High-Performance Work Practices (HPWP) was found to be positively associated with firm performance. However, the mechanisms through which HPWP affect firm performance have not been studied in much detail. In this paper we argue that HPWP lead to higher levels of knowledge creation within the firm, and that knowledge creation is positively associated with value creation, which in turn affects firm performance. The main contribution of this paper is the delineation of two aspects of knowledge creation that are influenced by HPWP: coordination of knowledge-creating activities and motivation of employees to create knowledge. We adopt Nonaka's typology of knowledge creation modes to study how HPWP affect each of the four integral modes of knowledge creation: socialisation, externalisation, combination and internalisation. We also examine how HPWP influence intrinsic and extrinsic motivation for knowledge creation. Testable propositions are developed and possible areas of future research are outlined.

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