High Performance Work Practices and Human Resource Management Effectiveness: Substitutes Or Complements?

The human resource management literature has implicitly treated high performancework 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 assubstitutes and as complements. Main effects reveal that only human resourcemanagement effectiveness affects market performance and that HPWPs affect innovation.However, interacting HPWPs with HRM effectiveness positively relatesto both market performance and innovation in support of our hypothesis. Theresults suggest that effective HRM can offset HPWP's expense and that HPWPscan enhance the flexibility of effective HRM systems.