High-Performance Work Practices and Labour Productivity: A Six Wave Longitudinal Study of UK Manufacturing and Service SMEs

Sheehan, Maura; Garavan, Thomas

Abstract

This study utilises both evolutionary resource-based view (EBRV) and open systems theory to investigate the long term impact of high-performance work practices (HPWPs) on labour productivity in UK manufacturing and service sector SMEs. We investigate both forward and reverse causality and the moderating role of owner-manager strategic orientation, and whether such relationships are influenced by firm size and age. Utilising a longitudinal data set (a balanced panel) comprising 284 UK SMEs and six waves of data collection over a ten-year time period (2007–2017), we found support for both forward and reverse causality. Prior investments in HPWPs were positively associated with subsequent firm labour productivity and prior labour productivity was positively associated with future investment in HPWPs. The size of the estimated coefficients for these relationships were consistently larger for small firms than for medium sized firms, however there were not significant for firm age. We additionally found that owner-manager strategic orientation towards HR moderated both forward and reverse causality relationships and that this relationship increased over time. The size of the estimated coefficients was larger in small firms compared to medium-sized firms. Overall, our findings support calls to investigate both forward and reverse causality and to better understand potential differences between small and medium sized firms.

Citation

Sheehan, M., & Garavan, T. (2022). High-Performance Work Practices and Labour Productivity: A Six Wave Longitudinal Study of UK Manufacturing and Service SMEs. International Journal of Human Resource Management, 33(16), 3353-3386. https://doi.org/10.1080/09585192.2021.2005658

• Journal Article Type: Article
• Acceptance Date: Nov 5, 2021
• Online Publication Date: Dec 10, 2021
• Publication Date: 2022
• Deposit Date: Dec 15, 2021
• Publicly Available Date: Dec 15, 2021
• Print ISSN: 0958-5192
• Publisher: Routledge
• Peer Reviewed: Peer Reviewed
• Volume: 33
• Issue: 16
• Pages: 3353-3386
• DOI: https://doi.org/10.1080/09585192.2021.2005658
• Keywords: High performance work practices (HPWPs), small and medium-sized firms (SMEs), evolutionary resource-based view (ERBV), open systems theory, owner-manager strategic orientation (S-O), firm age, labour productivity, forward and reverse causality
• Public URL: http://researchrepository.napier.ac.uk/Output/2820289