To Fit in or Stand Out? Competing Priorities Shape the Adoption and Consequences of HPWS

Abstract

Building on institutional theory and the notion of vertical alignment in the strategic human resource management (SHRM) literature, I undertake a nuanced examination of the antecedents and consequences of high-performance work systems (HPWS). I suggest that firm age and market entry timing (i.e., first-mover vs. late-mover timing) jointly shape the strategic imperatives and resource constraints faced by focal firms – in turn influencing the relative attractiveness of legitimacy vs. distinctiveness as incentives for HPWS adoption. I further argue that industry peers’ HPWS use will differentially influence the effect of focal firms’ HPWS use on product sales based on the distinct needs of first-movers and late-movers. Using longitudinal data on 3,218 firm-year observations from seven waves of data between 2005 and 2017, I demonstrate that the effect of industry peers’ HPWS use on focal firms’ decision to adopt HPWS is contingent on the competing priorities firms face as a function of their age and market entry timing. The findings also indicate that firms benefit more from HPWS use in the form of increased product sales when HPWS investments align with the strategic imperatives associated with their market entry timing and the pressures exerted by the institutional contexts in which they are embedded. This paper advances our understanding of when firms adopt HPWS and under which circumstances HPWS benefit firm performance.