Competition, market commonality, and resource similarity: precursors to HPWS
| Date | 04 November 2019 |
| Published date | 04 November 2019 |
| DOI | https://doi.org/10.1108/PR-09-2018-0356 |
| Pages | 1830-1847 |
| Author | Nicholas Ryan Prince |
| Subject Matter | Hr & organizational behaviour,Global hrm |
Competition, market
commonality, and resource
similarity: precursors to HPWS
Nicholas Ryan Prince
Department of Management and Marketing, College of Business,
University of Wyoming, Laramie, Wyoming, USA
Abstract
Purpose –The purpose of this paper is to investigate the effect competition has on organizations’use of
high-performance work systems (HPWSs). Specifically, using the resource-based view (RBV) of the firm, it
develops a logic for why firms will increase their use of an HPWS when competition increases. It investigates
the direct effect of competition on HPWS use. Additionally, it takes a look at the impact market commonality
and resource similarity have on the influence of competition on organizations’use of an HPWS.
Design/methodology/approach –Survey method design was used to collect data abo ut organizations
from 127 alumni of two la rge Midwestern univer sities in the USA. Dat a were analyzed using OL S
regression analysis.
Findings –The main finding of this paper is that competition increases the use of HPWSs. There was not
statistical support for the effect of market commonality or resource similarity to influence the competition–HPWS
relationship.
Originality/value –This study uses the RBV of the firm to understand how competition influences the
adoption of HPWSs. Additionally, it also investigated the effect of market commonality and resource
similarity, which has not previously been looked at.
Keywords Resource-based view, Quantitative, Competition
Paper type Research paper
Competition takes place as organizations take competitive actions to gain customers,
employees and resources from other organizations and is a strong determinant of
organizational action (Henderson and Mitchell, 1997; Chen, 1996; Paton and Wilson, 2001).
Competition has been shown to influence a variety of actions such as the emphasis
organizations put on impression management (Cole and Chandler, forthcoming), how
strategic communications are written (Guo et al., 2017), managers cognitive perceptions as
they plan the strategic direction of the firm (Rindova and Fombrun, 1999) and increasing the
complexity of organizational actions to make it harder for competitors to replicate (Chang
et al., 2017). The list could go on, yet despite being established as an important influence on
organizational action, competition has only been tangentially touched on as an antecedent to
organizations’adoption of a high-performance work system (HPWS).
This is especially curious since one of the most common assumptions of research in
strategic human resource management (SHRM) is that implementing an HPWS will lead
organizations to be more competitive and improve organizational performance (Combs et al.,
2006; Huselid, 1995; Guest et al., 2013). As such, it is commonly believed organizations
should respond to competition by increasing their use of an HPWS (Guest et al., 2013). The
German banking industry in the early 1990s is an example of competition leading to
increased HPWS adoption by implementing a relationship-banking strategy that included
the adoption of high-performance work practices (HPWPs) (Keltner, 1995). The two papers
that do look at the influence of competition on HPWSs have contradictory findings, with
Ordiz-Fuertes and Fernández-Sánchez (2003) finding that competition has an impact on the
adoption of HPWSs and Patel and Cardon (2010) finding that competition did not have a
significant impact on adoption of HPWSs. Neither paper developed an explanation of why
Personnel Review
Vol. 48 No. 7, 2019
pp. 1830-1847
© Emerald PublishingLimited
0048-3486
DOI 10.1108/PR-09-2018-0356
Received 20 September 2018
Revised 23 February 2019
13 April 2019
Accepted 19 May 2019
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0048-3486.htm
1830
PR
48,7
they expected competition to influence organizations’use of an HPWS. Logically, as
competition increases, managers will look for ways to become more competitive, to attain a
sustainable competitive advantage.
The resource-based view (RBV) of the firm provides insight into why the relationship
between competition and HPWS adoption is likely to exist. Specifically, the RBV stipulates that
the more valuable, rare, non-imitable and non-substitutable a firm’s resources are, the greater its
ability to have a sustainable competitive advantage (Barney, 1991). Adopting HPWSs is one way
organizations can influence the assets of their organization to be more valuable, rare, non-
imitable and non-substitutable. As human capital becomes more valuable, it also increases its
ability to derive value from the non-human resources (HR) of the organization, thereby increasing
the ability of an organization to attain a sustainable competitive advantage (Wibbens, 2019).
Market commonality, when competitors overlap in the markets they serve, and resource
similarity, when competitors have access to similar resources, are two competitive
influences in the external environment (Derfus et al., 2008). Traditionally, when competition
increases in the external environment, organizations will take action to be competitive, but
when these two competitive influences are present, it is not uncommon for competitors to
practice mutual forbearance, where competitors refrain from taking action to avoid
incurring costs for actions that do not increase the firm’s competitiveness and can result in a
net loss (Greve, 2008). What is unclear is the impact these two competitive factors will have
on organizations’adoption of an HPWS. Most competitive actions organizations can take
are quickly visible to their competitors (i.e. pricing strategies, entering into joint-ventures,
etc.), less visible actions, like implementing an HPWS, are internal to the firm and are harder
to replicate. The implementation of an HPWS is a competitive action that firms can take to
increase their competitiveness when they are otherwise constrained in taking action.
The purpose of this study is to investigate the effect competition has on organizations’use of
HPWSs. Specifically, using the RBV, it will develop a logic for why firms will increase their use of
an HPWS when competition increases. As seen in Figure 1, this study will first investigate the
direct effect of competition on HPWS use. It will then take a look at the impact market
commonality and resource similarity have on the influence of competition on organizations’use
of an HPWS. While most organizations will practice mutual forbearance when these competitive
influences are high, it is possible that HPWSs are a competitive answer. Survey methodology
was used to test these relationships. Data were collected from alumni of two large Midwestern
universities and an association of HR professionals from the Rocky Mountain region.
Strategic human resource management
Academically, SHRM is “the pattern of planned human resource deployments and activities
intended to enableorganizations to achieve their goals”(Wright and McMahan, 1992,p. 298).
More recently, this definition has been expanded to include the study of HR systems and
subsystems and their interaction with both the internal and external environments of the
organization ( Jackson et al., 2014). Stated simply, SHRM refers to how organizations use HR
practices to achieve strategic goals and the interaction of these practices with their internal
and external environment (Datta et al., 2005). SHRM is used by organizations to increase
employee fit with strategy, increase its flexibility and improve their overall capabilities
(Wright and Snell, 1998; Wood, 1999).
Market
Commonality
Resource
Similarity
Competition HPWS
Figure 1.
Conceptual model of
competition and
HPWS
1831
Precursors to
HPWS
To continue reading
Request your trial