Abstract
ABSTRACTDrawing upon the resource‐based view and economic cost perspective, we examined the effect of firms' use of high‐performance work systems (HPWS) on two firm performance outcomes—firm financial performance (FFP) and firm innovation and improvement (FII), indirectly through firm capacity for learning and transforming external knowledge and technologies (CLT). Our results confirmed that HPWS positively related to both FFP and FII through firm CLT. HPWS was found to have a linear association with CLT but an inverted U‐shape relationship with FFP. We also revealed a three‐factor structure of firm HPWS: motivation to perform, skills to enhance, and opportunity to engage. The supplementary analysis demonstrated a lack of significant three‐way interaction between these three HPWS factors. Implications and future research directions are discussed.
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