Understanding high performance work systems: The joint contribution of economics and human resource management

High-performance work systems (HPWS) are organizations that utilize a fundamentally different approach to managing than the traditional hierarchical approach associated with mass production/scientific management. At the heart of this emerging approach is a radically different employer-employee relationship. Leading organizational behavior specialists believe that HPWS has the greatest potential to provide sustained competitive advantage to companies adopting it. Thus, human resource managers and scholars as well as economists ought to be very interested in it. While much has been written about HPWS in the human resource management (HRM) literature, economists’ attention to it has been practically nil despite the fact that organizational economics is a significant area within economics. The primary purpose of this paper is to improve our understanding of the superior economic performance of HPWS. The secondary purpose is to compare the respective contributions of the HRM and economics disciplines to this understanding. The HRM/ organizational behavior literature contains important explanations regarding the economic performance of HPWS. In contrast, there is hardly any economic literature explicitly focused on HPWS. However, as indicated below, economic theory, particularly x-efficiency theory, can be adapted to this purpose. The explanations that make the most sense of the economic performance of HPWS are interdisciplinary ones that integrate economics with organizational behavior.

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