Industry capital intensity and firms’ utilization of HCWS: does firm size matter?

Date04 March 2019
Published date04 March 2019
DOIhttps://doi.org/10.1108/PR-03-2017-0069
Pages492-510
AuthorBo Zhang,Jianxun Chen,Amy Tian,Jonathan Morris,Hejun Fan
Subject MatterHR & organizational behaviour,Global HRM
Industry capital intensity and
firmsutilization of HCWS:
does firm size matter?
Bo Zhang
School of Economics and Management,
Beijing University of Chemical Technology, Beijing, China
Jianxun Chen
Institute of International Economy,
University of International Business and Economics, Beijing, China
Amy Tian
Curtin Business School, Curtin University, Perth, Australia
Jonathan Morris
Cardiff Business School, Cardiff University, Cardiff, UK, and
Hejun Fan
College of Business Administration,
Capital University of Economics and Business, Beijing, China
Abstract
Purpose Following industry-based views (IBV) isomorphic trend among firms in the same industries, the
purpose of this paper is twofold: first, to investigate whether industry capital intensity encourages or inhibits
firms utilization of strategic HRM systems, particularly, high-commitment work systems (HCWS); and
second, to examine the quadratic moderating role of firm size on the relationship between industry capital
intensity and firmsutilization of HCWS, drawing on the interactionist view of IBV and the resource-based
view, as well as the interactive perspective in the contextualized HRM field.
Design/methodology/approach The research design was time lagged. Firm-level subjectively rated data
were collected from 168 large firms with more than 200 employees in Beijing. Industry-level objectively rated
data were collected from the statistics yearbooks of Beijing city.
Findings The industry capital intensity was positively related to firmsutilization of HCWS, all else being
equal. For large firms in this research, the relationship between industry capital intensity and firms
utilization of HCWS was moderated by firm size in a quadratic way.
Originality/value This research contributes to contextualized HRM literature by empirically examining
the complex interactive effects of industry capital intensity and firms utilization of HCWS. First, it
established the direct cross-level relationship between industry capital intensity and firmsutilization of
strategic HRM systems. Moreover, it explored the boundary conditions of such relationship by investigating
the quadratic moderating role of firm size.
Keywords Quantitative, Contextualized HRM, Interactionism, Industry capital intensity, Firm size,
High-commitment work systems, China
Paper type Research paper
Introduction
Scholars of strategic HRM, from a contextualist perspective, suggest that the use of HRM
systems is determined by an organizations environmental factors ( Jackson and Schuler,
1995; Jackson et al., 2014). As a crucial aspect of the firms environment, industry capital
intensity, the relative investment in fixed assets in an industry(Guthrie and Datta, 2008,
Personnel Review
Vol. 48 No. 2, 2019
pp. 492-510
© Emerald PublishingLimited
0048-3486
DOI 10.1108/PR-03-2017-0069
Received 12 March 2017
Revised 26 August 2017
1 April 2018
19 June 2018
Accepted 4 July 2018
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0048-3486.htm
This research is supported by National Natural Science Foundation of China (Grant Nos 71702116,
71572037 and 71532003)and Key project of Beijing Municipal EducationCommission (SZ20171003824).
492
PR
48,2
p. 113), plays a prominent role in determining a firms use and effectiveness of strategic
HRM systems (e.g. Datta et al., 2005; Koch and McGrath, 1996). However, the current
literature contains two contradictory streams of understanding about the effects of industry
capital intensity on firmsutilization of strategic HRM. Some scholars argue that industry
capital intensity encourages firmsuse of strategic HRM practices/systems (e.g. Arai, 2003;
Koch and McGrath, 1996), because firms in capital-intensive industries benefit greatly from
employee input for problem solving and the reduction of mistakes at work (Koch and
McGrath, 1996). Others, however, contend that industry capital intensity inhibits the use of
strategic HRM systems, because there are greater constraints placed upon employee
performance by the degree of task structure or the degree of automation of the production
technology(Terpstra and Rozell, 1993, p. 43; see also Datta et al., 2005). Despite their
contradictory arguments, both groups of scholars may be right, since their contradictory
findings might be attributed to both theoretical and methodological limitations.
First, despite the theoretical reasoning underlying the effect of industry capital intensity upon
afirms use of HRM practices (Datta et al., 2005; Koch and McGrath, 1996; Terpstra and Rozell,
1993), empirical results supporting the role of industry capital intensity as a distinct industrial
antecedent that determines a firms utilization of HRM practices remain a void. This lack of
attention is surprising, given that industry capital intensity has been repeatedly argued to be
directly related to variations in the types and range of competitive actions pursued in an
industry(Datta and Rajagopalan, 1998, p. 835; see also Datta et al., 2005; Guthrie and Datta,
2008; Terpstra and Rozell, 1993). Empirically, research investigating the role of capital intensity
has typically treated capital intensity as a firm-level variable (e.g. Arai, 2003; Koch and McGrath,
1996), a control variable (Chadwick et al.,2015;Chadwicket al., 2013; Park, 2012; Su and Wright,
2012) or a background variable (e.g. Gittlemanet al., 1998; Osterman, 1 994). An exception is Datta
et al.s (2005) research, which measured capital intensity at industry level. However, they used it
as a moderator of the HRM-performance relationship. Thus, our study addresses this important
yet under-researched area by clearly capturing the direct and cross-level positive relationship
between industry capital intensity and firmsutilization of HRM practices. In so doing, we begin
to provide some preliminary but very much needed empirical evidence to consolidate the
contradictory understanding about industry capital intensity-HRM practices relationship.
Second, previous research on capital intensity and HRM practices has often adopted a
piecemeal approach that focuses on separate, single HR practices, such as careful selection and
training (e.g. Koch and McGrath, 1996), team work and rotation (e.g. Gittleman et al., 1998;
Osterman, 1994), high wages, and comfortable working conditions (e.g. Arai, 2003). Little
research has considered HR practices in the form of a system. This is a significant
shortcoming, becausethe central themeof strategic HRM stressesthe use of HRM systemsas a
pre-condition for firmsto generate competitive advantagethrough people( Barneyand Wright,
1998). Such HRM systems are known as high performance work systems or, interchangeably,
high-commitment work systems (HCWS), or an ensemble of HR practices that aimsat getting
more from workers by giving more to them(Baron and Kreps, 1999, p. 189). As the strategic
HRM field has achieved a system-based view (as opposed to a piecemeal-based view) (Barney
and Wright, 1998), the extant understanding of the relationship between industry capital
intensity and firms utilization of HRM systems has lagged behind and is still focusing on
separate, single HRM practices. These two limitations gave rise to our first question: Does
industrycapital intensityencourage or inhibita firms use of strategic HRM systems? Our first
research purpose is therefore to seek to answer this ques tion by investigating the direct
relationship between industry capital intensity and firmsutilization of HCWS.
The third limitation of previous research is that the conceptualization has lacked an
interactionist perspective, which has been promoted by strategy and HRM scholars.
Strategy researchers argue that both industry factors and firm factors can determine a
firms strategy (Mauri and Michaels, 2015), while strategic HRM researchers contend that
493
Firms
utilization
of HCWS

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