From Work Systems to Performance Improvement: Knowledge Sharing as the Process Link

Organisations often invest in formal work systems to improve performance, yet results remain uneven because system adoption does not guarantee that knowledge will move effectively across everyday work. This study examines how work systems become performance‐relevant by assessing direct, mediating and moderating pathways linking high‐performance work systems (HPWS), knowledge sharing, transformational leadership and organisational performance. Using survey data from 257 employees and supervisors across varied organisational settings in Indonesia and analysing the model with PLS‐SEM, we find that HPWS contribute to organisational performance both directly and indirectly through knowledge sharing. Knowledge sharing emerges as a central process mechanism through which formal work systems are translated into coordination, learning and execution outcomes, although it is not the only pathway through which HPWS create value. Transformational leadership does not strengthen the HPWS–knowledge sharing relationship as hypothesised; instead, the interaction effect is significant but negative, suggesting a more complex relationship between leadership and formal work systems. The paper contributes to knowledge‐management and process‐management scholarship by showing that HPWS operate not only as formal HR systems but also as knowledge‐enabling work systems whose performance value depends partly on knowledge‐sharing activation. It also offers policy and practical insight for executives and management consultants seeking to design work systems that strengthen both organisational coordination and knowledge flow.