The human resource management literature has implicitly treated high performance
work practices (HPWPs) and human resources management (HRM)
effectiveness as substitutes for one another with respect to their relationship with firm performance. We contend that HPWPs and HRM effectiveness act both as
substitutes and as complements. Main effects reveal that only human resource
management effectiveness affects market performance and that HPWPs affect innovation.
However, interacting HPWPs with HRM effectiveness positively relates
to both market performance and innovation in support of our hypothesis. The
results suggest that effective HRM can offset HPWP's expense and that HPWPs
can enhance the flexibility of effective HRM systems.
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