Int. J.

of Human Resource Management 14:4 June 2003 511-529 D Routiedge

•' ^ B ^ ^ Taylor & Francis Group

High-involvement practices in human

resource management: concept and
factors that motivate their adoption

Monica Ordiz-Fuertes and Esteban Ferndndez-Sdnchez

Abstract Using data on 250 Spanish firtns, we examine the incidence of

high-involvement practices and investigate what variables are associated with the adoption
of these practices. Particularly, we analyse the influence of size, age, competitive
advantage, activity sector, the existeoce of a recent crisis, culture, leadership style and the
competitiveness of the environment on the adoption of high-involvement work practices.
With all this, we try to offer an exploratofy view of nature of the contexts that condition
the adoption of such practices, with the aim of motivating future research more thoroughly.

Keywords Human resource practices; age; size; competitive strategy; organizational

culture; management style; activity sector; environment.

Introduction
The concept of best practices in hutnan resources is a critical theme that dominates the
humaa resource managemetut literature (Sheppeck and Militello, 2000). These practices
are also called liigh-iiwolvemetit practices', 'innovative' or 'flexible', and refer to those
non-traditional HR practices that have become widespread in companies (Ichniowski
et al., 1996). These practices have been defined in various ways, but generally include
three dimensions: high relative skill requirements, jobs designed to provide the oppor-
tunity to use those skills in teams or in collaboration with other workers and an incentive
stnicture to induce discretionary effort (Appelbaum et al., 2000). The central assurnption
is that managements, through designing high-commitment work systems, are creating the
conditioriS for employees to become highly involved in the organization and identify with
its overall goals.
This new way of thinking has become a preferred focus of attention nowadays and,
therefore, this paper seeks to contribute to this research area by testitig hypotheses
concerning influences on the adoption of high-involvement work (HIW) practices in
Spanish firms.

Literature reyiew and hypotheses

The issue of selection of certain contingent variables from the long list of available
factors as possible deterrninaats of HIW practices needs serious attention (Budhwar and
Khatri., 2001). The problem is the huge difficulty in modelling all the factors that

Mooica Oixliz-Fuertes, Facultad de Ciencias Economicas y Empresariales, Avda. del Cristo, s/n 33071
Oviedo, Spain (tel: +34985104970; fax: +34985103708; e-mail: ordiz@correo.nniovi.es); Esteban
Fernandez-Sanchez, Facultad de Ciencias Econoirdcas y Empresariales, Avda. del Cristo, s/n 33071
Oviedo, Spain (tel: +34985103919; fax: +34985103708; e-mail: esfeman@correo.uniovi.es).

The International Journal of Human Resource Management

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512 The International Journal of Human Resource Management

influence the adoption of HIW practices. For example, Osterman (1994) confirmed that
a number of variables are positively associated with the adoption of HIW practices:
a market with international competition; a high-skill technology; a strategy emphasizing
service, quality and variety of products rather than low cost; and being part of a larger
organization. Roche (1999) studied the turbulence in organizations, strategic integration
and the presence of unions; and Budhwar and Khatri (2001) analysed the influence of
a number of contingent variables, such as age of the organization, size, life-cycle stage,
ownership and presence of unions. These works, and a review of the mainstream
literature, will enable us to formulate a set of hypotheses referring to the independent
variables which might influence the adoption of HIW practices in the Spanish context.
Specifically, we shall analyse whether size, age, competitive strategy, activity sector,
existence of a recent crisis, organizational culture, management style and environment
rivalry have an influence on their adoption. As a preview, our argument is summarized in
Figure 1, which presents the conceptual framework for this study.

Influence of size
The size of the organization has been shown to affect HR practices, but the direction of
the effect is ambiguous (Osterman, 1994). Some authors (Geary, 1999; Smith and
Hayton, 1999) have shown a lack of conclusive results with this variable. Other studies
(Terpstra and Rozell, 1993; Godard, 1991) reveal that the larger organizations make
significantly greater use of HIW practices: smaller firms face many pressures, so they
have fewer resources to invest in HIW practices, so the notion that systems of HRM
which involve employee participation are more likely to be found in larger organizations
is supported (McNabb and Whitfield, 1999). In the same vein, we can cite Newton (1998,
2001) and Youndt et al. (1996) who stated that large companies are more likely to
implement HIW practices effectively. Thus, Newton (1998, 2001) observed that smaller
companies were less likely to use rewards based on teams, arguing that the benefits
associated with their adoption did not compensate the cost involved.
On the other hand, some authors have tested the opposite argument: Osterman (1994)
observed that smaller firms, which are not weighed down by bureaucracy, are more agile
and more likely to adopt HIW practices. Sheppeck and Militello (2000) also agree with
this argument. The authors, in their study drawn from companies in different activity
sectors, observed that the likelihood of adopting HIW practices did not depend on size.

SIZE
RECENT CRISIS
AGE
COMPETITIVE STRATEGY I ^ ^ ^ ^ ^ - ^
^ ^ ^ HIGH-INVOLVEMENT
ACTIVITY SECTOR WORK PRACTICES
CULTURE \-^—^'7^--''^^
LEADERSHIP STYLE
ENVIRONMENT

Figure 1 Conceptual framework

 Ordiz-Fuertes and Fernandez-Sanchez: High-involvement practices in HRM 513

The first argument is the more common thesis of the mainstream literature; thus we
can put forward the following hypothesis:

Hypothesis 1: Size influences the adoption of HIW practices. The largest companies
are more likely to adopt HIW practices.

Influence of a recent crisis

There are opposing views on the influence of a crisis on companies. Huselid and Becker
(1997) and Youndt et al. (1996) noted that more profitable flrms can afford more HIW
practices, because the first premise is that the adoption of HIW practices can entail
substantial expenditure. Although the authors recognize that the alternative bias is
equally plausible, less profitable firms have a greater need for HIW practices and are
therefore more likely to pursue them. This argument is supported by Terpstra and Rozell
(1993), who considered it more plausible that the causal arrow runs from adoption to
profitability, rather than from profitability to adoption.
In the same vein, Pil and MacDuffie (1995) and Dunlop and Weil (1996) examined the
links between past performance and the decision to pursue an innovative work practice
strategy. Founding evidence on the fact that establishments often introduce innovative work
practices during the periods the establishment is facing severe problems. The cost of change
relative to maintaining the status quo is less for poorly performing organizations, and
change is more likely, so this may cause plants with poor levels of performance to opt first
for flexible production and HIW practices (Pil and MacDuffie, 1996).
Thus, Wright et al. (1998), in a sample of petro-chemical refineries, observed that
those companies that had experienced worse retUims during the previous three years were
the ones to recognize the need to involve human resources in the decision-making
process. By contrast, the companies that had obtained good returns did not change their
current practices, claiming the philosophy of 'if it isn't broken, don't fix it'. In short,
under low return conditions companies consider their organization inefficient; therefore,
although the application of changes may imply a loss of competitiveness for a while,
the differential will not be too big and these companies will tend to promote
changes. Resulting from the above argument, the following hypothesis will be tested in
this paper:

Hypothesis 2: The existence of a recent crisis conditions the adoption of HIW

practices. Poor performers are more likely to implement HIW
practices.

Influence of age
Population ecology (Hannan and Freeman, 1977) suggests that the age of an establish-
ment shodd inversely influence its rate of adoption of innovations due to the rigidity
problems that appear when any type of change is proposed in established structures.
Natural selection forces companies with inadequate organizational forms out of the
market. This rigidity or structural inertia (Hannan and Freeman, 1977) may endanger
a company because, if it does not adapt to the new conditions, it will not be able to
survive in a turbulent environment. Failure to apply HIW practices is often due to
resistance to change and the difficulty of unlearning the old way of doing things (Pil and
MacDuffie, 1996). These routines provide a potential source of advantage to the firm
(Nelson and Winter, 1982) but, when trying to adopt HIW practices, the less experience
accumulated by workers with existing practices and the less fixed their expectations of
514 The International Journal of Human Resource Management

how things should be done, the easier it will be to apply HIW practices. Therefore, a lot
of studies argue that 'greenfield sites' are more likely to adopt HIW practices than are
firms that have been operating for longer periods of time (Ichniowsky et al., 1996).
Consequently, the following hypothesis will be tested:

Hypothesis 3: Age influences the adoption of HIW practices. New start-ups are
more likely to implement HIW practices.

Influence of the competitive strategy

Closely related to the nature of human resource management practices is how an
organization seeks to compete in the marketplace. Some authors consider it necessary
that there should be some coherence between the human resource strategy and the
business strategy, as the results obtained will depend directly on this alignment (Wright
et al, 1995; Delery and Doty, 1996; Youndt et al, 1996). This affirmation is based on
Porter's (1985) assumption that different strategies require employees with different
abilities. The author points out the existence of a strong correlation between human
resource policies and competitive advantage, and proposes to combine generic strategies
with the most suitable resource policies for each particular case.
The usual categorization of strategy that HR researchers use is that developed by
Porter (1980) and Gomez-Mejia et al. (1997). Thus, in order to reach a solid position,
three generic strategies may be followed: cost leadership, differentiation and focus.
HR strategies that fit a low-cost approach foster adhesion to rational and highly
structured procedures to minimize uncertainty, and discourage creativity and innovation.
Where management seeks to compete on the basis of producing customized goods and
services, the requirement to introduce HIW practices that permit employees more
flexibility and autonomy to respond to the particular concerns of customers may be
compelling (Piore and Sabel, 1984). Conversely, firms competing on the basis of price
are less likely to adopt HIW practices (Youndt et al, 1996; Guthrie et al, 2002).
The evidence likewise shows an association between the competitive strategy
companies actually apply and the choice of HIW practices: for example, Arthur (1994)
observed that mills pursuing a cost leadership strategy were more likely to have control
human resource systems, and mills with differentiation strategies were more likely to
have commitment human resource practices.' The author deduced that competitive
strategies creating greater levels of discretion are conceptually and empirically more
consistent with HIW practices. Guthrie et al (2002) found the use of HIW practices was
positively associated with performance in firms competing on the basis of differentiation.
Batt (2000), in her study in the service industry, observed that companies use HIW
practices when clients demand a high value-added product. Sanz-Valle et al (1999), in
the Spanish context, provided evidence to support the theory that the HR practices that
companies developed could be explained partly by their strategy. Therefore, the evidence
does suggest that the likelihood of adoption is greater in higher value-added markets
where cost constraints are not as great and where efficiencies on rationalization are
difficult to realize (Batt, 2000). The more intensive use of HIW practices depends on the
competitive strategy being pursued. Therefore, the following hypothesis will be tested:

Hypothesis 4: Competitive advantage influences the adoption of HIW practices.

Firms competing on the basis of differentiation are more likely to
adopt HIW practices.
 Ordiz-Fuertes and Fernandez-Sanchez: High-involvement practices in HRM 515
Influence ofthe activity sector
To understand the use of HIW practices in services, it is particularly important to
disaggregate the data into different industries. A country's economy may be divided into
various activity sectors; however, the distinction between manufacture and services is the
one most frequently used. Service companies differ from manufacturing companies in
three aspects (Bowen and Schneider, 1988): (1) services are intangible, (2) the client's
presence is necessary for rendering the service and (3) services are produced and
consumed at once.
The intangible nature of services implies that it is difficult to supervise workers'
performance. The fact that clients are deeply involved in giving service means that
workers must be aware of their needs. The simultaneousness between production and
service rendering has implications in HR practices to the effect that quality control
cannot be carried out in the same way as in a manufacturing company, because in service
companies this control takes place at the specific moment when such service is given and
falls on the person in charge of it.
Hofstede (1991) emphasized the key importance of the sector as determinant of the
HR practices a company undertakes. Terpstra and Rozell (1993) observed that the
number of HIW practices employed by organizations differed significantly according to
the industry. It is possible that manufacturing firms focus relatively more attention on
materials, equipment and technology than on human resources. Conversely, service
organizations are expected to focus more on their primary resource: their employees. In
fact, they observed that the service industry employed more of the five practices
considered than did the manufacturing industry. Recent studies (McNabb and Whitefield,
1999; Batt, 2000; Hunter, 2000) analysed HIW practices in service companies and
concluded that the practices used vary according to the activity sector. Thus, it is possible
that service companies may consider human resources as key competitiveness factors
and, under such circumstances, implement practices to increase their involvement in the
company to a larger extent. Hence, we shall test the following hypothesis:

Hypothesis 5: The activity sector influences the adoption of HIW practices. Service
companies are more likely to adopt HIW practices.

Influence of the organizational culture

Schein (1990) points out that culture is what a group learns over a period of time, as that
group solves its problems of survival in an external environment and its problems of
internal integration, and Duncan (1989) highlights the three characteristics of
organizational culture: it is learned, it is shared and it is transmitted.
The need to achieve sustainable competitive advantages requires not only founding
them on the product and process technology - easily replicable - but also resting them
more on strategies based on the potential cultural development, that is, on the values and
ways of ttiinking that will constitute differentials difficult to replicate in the short term^.
Thus, HR practices are inextricably bound to organizational culture.
As Lawrence and Lorsch (1987) point out, culture may facilitate the adoption of
a certain strategy if there exists a strong coherence between them, or, on the contrary, it
may become 'an invisible barrier' which impedes and delays change. Dismantling an
organizational structure and a management style is very difficult because they reinforce
each other, there are communication networks and informal processes which make it very
516 The International Journal of Human Resource Management

difficult or impossible to change one without modifying the other. Cultural characteristics
foster aspects such as efficiency, differentiation, innovation and adaptation and reflect an
orientation towards clients, suppliers and/or dealers. In a company where managers keep
their distance from workers, problems are hidden, or change is not considered something
natural and necessary, HIW practices are not applied and human resource potentialities are
not taken advantage of. From such lines of argument it seems reasonable to think that
culture may have an influence on the type of human resource practice the company
designs and implements. In fact, Erez (1995) argued that human resource practices will
generate a certain pattern of behaviour in workers only when they are appHed in a specific
context, defining this as the nature of the tasks and the company's cultural characteristics.
And Sheridan (1992) noted that, if a culture encourages interpersonal relations it will
generate greater employee retention rates. So, HIW practices are more likely to be found
in organizations characterized by a high degree of strategic integration, that is, organ-
izations which view their employees as stakeholders or valuable assets (Roche, 1999).
From such arguments we can formulate the following hypothesis.
Hypothesis 6: Organizational culture influences the adoption of HIW practices.
Firms with an innovative culture are more likely to adopt HIW
practices.

Influence of the management style

The role of management becomes a subject of interest every time a new issue acquires
some relevance. Research has been focused on multiple perspectives: for example, the
influence of CEO characteristics on performance (Moussa, 2000) and the organizational
structure (Hambrick and Mason, 1984). In the same vein, Kochan et al. (1986) introduced
the idea that management values are an important determinant of HR practices.
Management strategies and HIW practices constitute a continuum: the formulation and
implementation of the strategy is an integrated process, so there is a strong interdependence
between managers, environment and employees (Mintzberg, 1978). Managers adopt those
practices expected to be profit rational (Godard, 1991), so if top-line executives believe that
the attraction, selection, retention and motivation of employees are critical to the firm's
competitive advantage (Wright et al., 2001) the probability of adoption of HIW practices
increases. In fact, HIW practices are more likely to be found where human resource
concerns assume major priority at top management level (Osterman, 1994).
Daily activities of managers are inherently heterogeneous and fragmented (Mintzberg,
1978). Managers face opportunities to cut costs or to enhance customer loyalty through
customization and relationship management. However, there are several recognized
taxonomies that attempt to classify managers' practices into coherent categories (Yulk,
1989). Those taxonomies delineate the content and scope of the usual practices of any
manager when dealing with subordinates and peers (Mintzberg, 1978). For example, an
autocratic management style cannot lead to employee commitment, loyalty and
productivity. We therefore deduce that managers' influence on the adoption of HIW
practices is crucial. It is, therefore, under flexible leadership that HIW practices are
adopted. Thus, the following hypothesis will be tested:
Hypothesis 7: Leadership style influences the adoption of HIW practices. Firms
with flexible leadership are more likely to adopt HIW practices.
Influence of the environment
Although HIW practices are not a simple response to environmental changes (Wood,
1995), how HR practices evolve is likely to depend on managerial responses to environment.
 Ordiz-Fuertes and Fernandez-Sanchez: High-involvement practices in HRM 517

In fact. Dual op and Weil (1996) found evidence in the apparel industry that the
organization's environment affects who adopts HIW practices. Stace and Dunphy (1991)
assume that companies must develop different strategies to adapt to the dynamism of
the environment. Under conditions of change, turbulence or growth, the organization can
use HIW practices to produce needed changes (Snow and Snell, 1992). Firms that
compete in such markets are more likely to be exposed to new ideas and practices, and
to be pressured to adopt them (Osterman, 1994). The relatively higher the competitive
dynamism or turbulence in organizations, the greater the emphasis that is placed on HIW
practices (Roche, 1999). So, bundles of HIW practices are commonly viewed as
a response to unstable, fragmented markets and dynamic competitive conditions. Miller
and Lee (2001) notice that in a stable environment, where products, customer tastes and
technologies change very slowly and predictably, fewer complex decisions are needed to
adapt the firm to its environment, so companies in stable environments put little emphasis
on HIW practices (Sheppeck and Militello, 2000).
Two important exceptions to this theoretical trend are, however, the normative theory
of Lengnick-Hall and Lengnick-Hall (1988) and the lack of conclusive results with
respect to environment rivalry obtained by Geary (1999).
From the main argumentations, the following hypothesis will be tested:

Hypothesis 8: The environment influences the adoption of HIW practices. Firms in

very competitive environments are more likely to adopt HIW
practices.

Empirical research
A brief description of the Spanish context and the methodology is provided next,
followed by a discussion of our empirical results. The limitations of the study and
implications for future research are examined in the final section.

The cultural context

Before beginning the presentation of our empirical reseai'ch, it will be useful to make
brief reference to previous work on this subject dealing with the Spanish context.
A review of the studies made of HR practices reveals that little has been done on this
topic in the Spanish context (for a detailed comparison with other European countries,
see Gill and Rrieger, 1999). Most studies are focused on alignment of HRM practices and
performance. There is also a prevalence of studies based on the resource-based view. The
most remarkable are those by Sanz-Valle et al. (1999), Romero and Valle-Cabrera (2001)
and De Saa-Perez and Garcia-Falcon (2002).
The earniogs of most Spanish companies are generated by a single main product. Most
of them suffer from production inefficiencies and costly manufacturing and distribution
systems. Some systemic factors account for the limited diffusion of some of HIW
practices, including management 'short termism', models of corporate governance which
emphasize maximizing financial returns and adversarial industrial relations traditions.
Studies focused ia the Spanish workplace indicate that the set of practices associated
with the commitment model are seldom encountered in practice and their incidence has
not irxreased very much in recent years. The internal labour market is composed of
a stable base of professional employees buffered by temporary contract labour. There
is also a great deficiency in professional training. Employers may have been in great
need of recruiting skills from outside the domestic labour market. Moreover, the
recognitio:! of qualifications plays an important role in the selection criteria when
518 The International Journal of Human Resource Management

applicants do not have previous work experience. Finally, innovators face the potential
opposition of trade unions.

Sample
Questionnaires with an accompanying letter were sent to the human resource managers
of firms operating in Spain in the fiscal year 1998. The sampling universe was the Duns
& Bradstreet establishment file of companies operating in Spain, and the sampling frame
was set to include only companies whose personnel count exceeded 100 employees.
Companies with fewer than 100 employees were not included in the sample, since it is
known that they usually do not have a formal organizational unit dealing with human
resources (Huselid, 1995). Thus, the size of target population was 5,972 companies.
Questionnaires were completed and returned by 250 of the 5,972 companies. The
response rate of 4.18 per cent is not as high as in US or UK studies. However, it is not
out of line with comparable survey-based studies of HR practices in Spain.
Whereas most previous studies have evaluated HR practices for the entire firm, the
study of effective implementation of HIW practices must consider the types of
capabilities of human resource staff (Huselid et al., 1997). We therefore decided to study
HIW practices separately for core employees. The global research project was started in
November 1998 with the design of the questionnaire, which comprised four sections:
1) the company's profile, 2) result indicators, 3) human resource practices and
4) management profile. With the purpose of testing the validity of the questionnaire
designed, experts were consulted about conducting a survey and, furthermore, during the
month of February, the questionnaire was pretested on a small sample of companies.
Table 1 shows the technical record of the research undertaken, which includes the target
population, the geographical domain, the temporal reference, the unit of analysis, the
sampling size, the duration of the fleldwork and the profile of the managers polled.
The data in Table 2 reflect the reasonably representative nature of the sample analysed
as regards size and activity sector of the target population. Likewise, following Osterman
(1994), we estimated a logit model in which the dependent variable was the probability
of response and the independent variables were size and activity sector - a dummy equal
to one if the establishment was manufacturing. The results confirmed that no significant
correlation was found between respondents and non-respondents regarding number of
employees and activity sector.

Methodology
In order to describe the factors that condition the adoption of HIM practices, we must
define the specific practices to be analysed. Several researchers have studied the effect of
HIW on firm performance (Huselid, 1995; Koch and McGrath, 1996). Unfortunately, to

Table 1 Background data on study and respondents

Characteristics
Target universe or population
Geographical/temporal domain
Sampling unit
Sampling size/response rate
Sampling error/level of confidence
Date of fieldwork
Respondent
Survey
Spanish companies with more than 100 employees
All the national territory/financial year 1998
Firm
250 valid surveys/4.18%
6.16%/95%
14 March to 1 July 1998
Human Resource Manager/CEO
 Ordiz-Fuertes and Fernandez-Sanchez: High-involvement practices in HRM 519

Table! Sample's representativeness

Population Sample
Size
Fewer than 500 employees 4,995(83.64%) 191(76.4%)
More than 500 employees 977 (16.35%) 59 (23.6%)
Total 5,972 (100%) 250 (100%)
lndust)y
Manufacturing 2,308(38.64%) 116(46.4%)
Services 3,664(61.35%) 134(53.6%)
•Non-financial 3,491(95.27%) 110(82.0%)
* Financial 173 (4.72%) 24 (17.9%)

date, the debate about what practices should be considered remains inconclusive, so there
is no clear list of HFW practices (Guest, 2001). In fact, no standard measure of HR
practices is currently being used and authors have varied considerably in the way in which
they have measured HR practices (Rogg et al., 2001). Assuming that what is desirable is
a brief selection of easily quantifiable practices (Guest, 2001), we have adopted a series
of items most consistent with prior theoretical and empirical research, especially those
that characterize organizations that put people first (Pfeffer, 1998). These practices
included aspects such as training, promotion, job security, self-managed teams, reduction
iri status differences, contingent remuneration, shared information and so on. The
variables included cover the range of areas commonly viewed as HIW practices. The
descriptive statistics for all variables are reported in Table 3. Correlation tables are not
shown due to limited space.
The approach taken here is similar to those of Osterman (1994) and Budhwar and Khatri
(2001). Given the ordinal and truncated nature of responses, conventional regression
analysis was inappropriate, so data were analysed using binomial logit regression. The
effect of these independent variables was estimated by the following regression:

HIW practices •= a -h a:(size) + /3(age) + ^(crisis) + ^(competitive strategy) + e(sector)

+ (^(culture) + ^(leadership style) + T](environment) + residua!

Table 3 Human resource practices: descriptive statistics

Mean Standard deviation
Training expense with respect to the sector average 3.4515 0.9083
Extensive rraining 3.9256 1.0076
Employment security 3.9665 0.8387
Internal promotion 3.3306 1.0732
Utilization of teams to solve specific problems 3.2958 0.9724
Utilization of teams in new product development 3.1957 1.2860
Utilization of TQM teams 3.4081 1.1738
Self-managed teams on the main tasks 3.4444 1.0680
Stock options for employees 2.1048 1.2012
Decentralization 2.5500 1.0048
Shaiing information 3.1456 1.0375
Co-operation among different departments 3.8119 0.8382
Reduction in status differences 3.1637 0.8831
Increase in the worker's responsibility 4.0500 0.7777
520 The International Journal of Human Resource Management

From the approach of Wood and de Menezes (1998), who suggested that organizations
with medium or high levels of HIW practices are prevalent,^ we deduce the dependent
variable by the construction of a typology of companies by means of cluster analysis to
differentiate between companies on their emphasis on HIW practices.
The Euclidean measure for distance between cluster centroids and the within-group
average method of forming clusters was used to derive two clusters. In order of size, the
largest group was the 'high-involvement cluster' (the highest scoring in HIW practices)
that comprised 114 firms (45.6 per cent) followed by the 'weak cluster' (the poorest
scoring ones) that comprised 96 firms (38.4 per cent). A univariate analysis of variance
was conducted to test that there were significant differences between the two clusters.
The results are shown in Tables 4 and 5.
With this information, we created, as a dependent variable, a dummy that took value 1
if the firai belonged to the highest scoring cluster and 0 otherwise. As independent
variables we take the following: size, age, competitive strategy, activity sector, existence
of a recent crisis, sector rivalry, culture and leadership style. The specific measurement

Table 4 Standardized question means by cluster

Cluster 2
High-
Cluster 1 involvement
Weak cluster cluster ANOVA
(N = 96) (N = 114) F/(sig)
Training expense 3.35 3.66 6.426 (0.012)
Extensive training 3.64 4.17 16.536 (0.000)
Utilization of teams to solve specific 2.98 3.62 23.319(0.000)
problems
Utilization of TQM teams 2.80 4.04 27.259 (0.000)
Utilization of teams in new product 2.38 3.82 84.468 (0.000)
development
Self-managed team in the main tasks 2.89 3.89 93.125 (0.000)
Employment security 3.06 3.42 62.574 (0.000)
Stock options for employees 1.51 2.57 6.238 (0.013)
Decentralization 1.99 2.98 50.953 (0.000)
Sharing information 2.58 3.65 64.981 (0.000)
Co-operation among different 3.35 4.23 80.591 (0.000)
departments
Reduction of status differences 2.68 3.57 78.156(0.000)
Increase in the worker's responsibility 3.67 4.35 71.790 (0.000)

Table 5 Variables in the equation

B ET Wald Exp(B)
Age -0.132 0.211 0.391 1 0.532 0.876
Size ^0.065 0.193 0.115 1 0.734 0.937
Recent crisis -0.266 0.436 0.374 1 0.541 0.766
Competitive strategy -0.151 0.299 0.255 1 0.614 0.860
Activity sector -0.841 0.443 3.600 1 0.048 0.431
Organizational culture 1.644 0.427 14.784 1 0.000 5.174
Leadership style 3.743 0.542 47.699 1 0.000 42.22
Environmental rivalry 0.677 0.237 8.189 1 0.004 0.508
Constant .800 1.396 0.328 1 0.567 2.225
 Ordiz-Fuertes and Fernandez-Sanchez: High-involvement practices in HRM 521
of each independent variable, as well as mean and standard deviation can be found in the
Appendix. Correlation tables are not shown due to limited space.
Subsequently, the logit regression was mn. We used a binomial logistic regression
becaEse a multinomial one requires very large samples, particularly if the number of
independent variables involved is substantial. The results are reported in Tables 4 and 5.
The regression explains a large percentage, specifically some 46.9 per cent if we take
as reference the Cox and Snell coefficient and 62.6 per cent if we consider the
Naguelkerke coefficient. The classification table likewise classified correctly 81.8 per
cent firms (83.9 per cent for value 0 and 80 per cent for value 1). Results show clear
support for hypotheses 6, 7 and 8. The results obtained seem to confirm that firms
adopting HIW practices are manufacturing companies (0.048) (which leads us to the
partial rejection of hypothesis 5), which belong to sectors with a high level of rivalry
(0.004), with an innovative culture (0.000) and with a flexible leadership style (0.000).
Conversely, non-significant influence was found with respect to the variables of size, age,
recent crisis and competitive advantage. The results of testing the hypotheses are
summarized in Figure 2.

Discussion of results and conclusions

As stated at the beginning, the primary purpose of the present study is to identify the
influence factors that condition the adoption of HIW practices. In this respect, the
findings are consistent with other research that has documented the influence of certain
factors ip the adoption of HIW practices.
First, our results concur with the framework suggested by Stace and Dunphy (1991),
and seerp to confirm the existing interdependence between management style,
environmental dynamism and HR practices. As Collins (1994) states, in environments
where competitiveness depends to a larger extent on dynamic advantages,^ companies
should focus their attention on human resources as the main generators of such
advantages. Therefore, companies in such contexts will emphasize to a larger extent all
those practices that increase the workers' motivation. Thus, contrary to the Lengnick-
HaJl and Lengnick-Hall perspective (1988), our results confirm that HIW practices are
more likely to be adopted in dynamic or turbulent business circumstances, and are
consistent with Roche's (1999) research on Irish organizations.
Second, the confirmation of the influence of flexible leadership and an innovative
culture as determining factors in the adoption of HIW practices was to be expected. Our
findings support the argument of Ogbonoa and Harris (2000), who studied the links
between leadership and culture. !n this respect, leadership and culture are strongly linked

Hypothesis 1 The largest companies are more likely to adopt HIW practices Rejection

Hypothesis 2 Poor performers are more likely to adopt HIW practices Rejection

Hypothesis 3 New start-ups are more likely to implement HiW practices Rejection

Hypothesis 4 Firms competing on the basis of differentiation are more likely to adopt HIW Rejection

Hypothesis 5 Service companies are more likely to adopt HIW practices Partial rejection

Hypothesis 61 Firms with an inrsovative culture are more likely to adopt HIW practices Supported

Hypothesis 7 \ Firms with flexible leadership are more likely to adopt HIW practices Supported

Hypothesis 81 Firms in very competitive environments are more likely to adopt HIW Supported

Figure 2 Summaiy: results of the hypotheses

522 The International Journal of Human Resource Management

(Ogbonna and Harris, 2000) and so are central to understanding organizations and
making them effective (Schein, 1990). Our findings add to these previous studies in that
they are also strong predictors of the type of HR practices the firm adopts.
Contrary to our expectations, the adoption of HIW practices is not influenced by
service industry. Whereas services are not a predictor of the adoption of HIW practices,
the significant coefficient confirms the reverse hypothesis, that is, manufacturing firms
adopt HIW practices to a larger extent. This does not necessarily imply that services do
not apply HIW practices. This interpretation would be clearly unwise. As Osterman
(1994) and Hunter (2000) point out, many of the examples and the language describing
HIW practices are drawn from manufacturing, but services are clearly different from
manufacttiring in their use of a number of HIW practices. For example, problem-solving
groups (Batt, 2000) and cross-functional flexibility (Hunter, 2000) are typically
associated with HIW systems in manufacturing. So, there are two plausible explanation
for our results: first, the practices were defined mainly focused on manufacturing firms;
second, most service firms in the sample were characterized by part-time employees,
low-skilled work and high lay-off rates. Under these circumstances, firms do not adopt
HIW practices because they consider their implementation inaccurate or ineffective.
Likewise, the adoption of HIW practices is likely to vary neither on the size nor on the
age of the firm. The results obtained do not support either of the two hypotheses,
although it is observed that the relationship with the dependent variable is negative in
both cases. This may confirm the fact that the new trends in managing HR are not limited
exclusively to large companies with path dependence. Conversely, there are a large
number of small and medium-size firms that are becoming aware of the importance of
people in the success of the company and thus focus their attention on the creation and
retention of knowledge. Therefore, we cannot affirm that size or age condition the
adoption of HIW practices, since we may encounter young and small companies that
implement HIW practices, as well as large companies already consolidated in the market.
As in previous studies, such as Pil and MacDuffie (1996), we found little support for
the hypothesis that adoption of HIW practices was low-performance driven. Although no
causal relationship has been proved, it may seem that successful firms possess the slack
resources required to invest in HIW practices. So, the evidence provided shows that HIW
practices are not related to poor performers, confirming recent studies, such as Huang
(2000), which support the assumption that HR practices are significantly related to
organizational performance. That is, HIW practices seem to benefit from profits.
Finally, our results reveal that HIW practices do not vary with competitive strategy.
These findings are consistent with the empirical research of Sheppeck and Militello
(2000) and Sanz-Valle et al. (1999) for the Spanish case. The former observed that the
search for excellence in operations was not associated with the adoption of specific HR
practices. The latter found a positive correlation, although the lack of statistical
signification provides only partial support to validate the hypothesis. This seems to
confirm that, although traditionally HIW practices have been attributed exclusively to
firms that base their competitive advantage on product differentiation, they are not
necessarily the only ones. As Pfeffer (1998) and Batt (2000) state, HIW practices lead to
better performance even in lower value-added segments.

Limitations and implications

Like all research, this study has some limitations which future research can build on. The
first, and maybe the most important, is the difficulty in establishing causal relationships
between the dependent variable - HIW practices - and the independent variables. The
 Ordiz-Fuertes and Fernandez-Sanchez: High-involvement practices in HRM 523
issue of causality can be better addressed in longitudinal designs. In fact, the most
reputable researchers on the matter include a final reflection in their studies recognizing
it as a limitation inherent in any empirical study. As an example, we can cite the
following: Osterman (1994), Wright et al. (1999), Hoselid et al. (1997), Fey et al. (2000),
Marchington and Grugulis (2000), Kamoche (2001), Richard and Johnson (2001).
Causality can really be tested only with data collected at different points of time.
Similarly, the results of this study are limited and constrained by the type of data used.
We can resort to objective measures - countable, stock-market, financial results - or, as
has been the case in our paper, to qualitative measures based on self-reported
questionnaires. We based our decision on Burgeois (1980) and Hitt (1988). The former
indicates that the opinion of the CEO about the ratio's meaning and its measure is as
important as the informative content itself. The latter points out that objective measures
are not enough to grasp the essence of complex concepts. Likewise, several empirical
works, especially those carried out by Lawrence and Lorsch (1987), reveal the existing
relationships between objective and subjective measures, which allows the justification
of self-report studies.
In addition, a weakness of this study is that all data are collected from a single source.
Nevertheless, and as a possible future extension of this work, we attempt to complete the
database with objective information, as well as to include in the model variables such as
trade-union influence or the level of intemationai development as determining factors of
the adoption of HIW practices.
Another limitation is the possible bias in the information provided by those surveyed,
which refers both to the positive self-evaluation individuals polled tend to demonstrate
and the different views of the ways in which companies implement HR practices. Large-
scale surveys also run into the problem that top management will not respond to formal
requests to disclose HR data. The term 'HIW practices' covers a variety of different
schemes. Such heterogeneity can introduce inexactitude into analysis and thereby bias
results which are based on it. As Ichniowsld et al. (1996) observed, a majority of
businesses have adopted some innovative work practices; however, only a small
percentage of businesses have adopted a full system of innovative practices. An
iEterpretatioe of this fact is that respondents may tend to exaggerate their actual practices
in the direction of socially acceptable responses. This is a risk present in any survey study
and may also have biased our,results in some way.
A very important limitatioo to which we want to make a direct reference is that
:relative to the response rate. Spanish firms have little incentive to reveal their exact HR
policies as well as theirfinancial'performance. In this respect, Ichniowski et al. (1996)
state that, in order to avoid bias in research, the best thing to do is to employ a large
sample and obtain a high response rate. However, they recognize that combining both
objectives is very difficult. From this perspective and being avk'are of the problems
inherent in a reduced answer rate, we considered it more appropriate to employ a large
database, since this characteristic constituted an important contribution of the present
work. Tbe main problem derived from this is the difficulty in confirming hypotheses,
although there are studies, considered as basic reference in the HR strategic literature,
with verj' reduced response rates, among which we can cite Delaney et al. (1989), Delery
and Doty (1996) and Huselid (1995) with response rates of 6.5 per cent, 11 per cent and
6.2 per cent respectively.
Finally, our hypotheses were developed; based on existing HR management theories,
which were primarily developed in the USA and UK, and tested in the Spanish context.
¥/hat are the implications of this study for other countries with distinct national
iestitntions and business climates? In spite of these limitations, this paper makes some
524 The International Journal of Human Resource Management

important contributions. First, it offers empirical evidence that some relationships

between the independent variables and HIW practices do exist. Furthermore, in
comparison with previous empirical research, it tests theoretical assumptions in a larger
sample and not only in industrial firms. Thus, the generalizability of results is not limited
to a certain sector under study. Third, it proposes to illustrate a series of relations that
may constitute a source for the generation of ideas. From this perspective, it must be
interpreted as an exploratory study that allows for developing future lines of research,
which may be subject to empirical verification in other populations.
For managers' interest, the study provides crucial information regarding the context-
specific nature of HR management. We emphasize the main points: 1) Effective
deployment of HTW practices should result in a high proportion of committed employees,
and HIW practices are well suited to every firm if adopted properly. Commitment of the
employees can help ensure that market cost leadership and differentiation strategies will
be properly executed. 2) This research emphasizes the limited degree to which HIW
practices have been diffused. Unfortunately, many firms are still wary of the cost implied
in their implementation. It also implies that firms have opportunities to develop
competitive advantages through people when their managers decide to implement HIW
practices. Managers should adopt not only those practices that they expect to be
successful. HIW practices are suitable in services, as well as manufacturing.
More research is needed in the Spanish context to demonstrate the benefits of HIW
practices in any context at any moment.

Acknowledgements
The authors would like to acknowledge the financial assistance provided by Principado
of Asturias through the PB-EJSOl-09 project. The authors are also grateful to anonymous
reviewers for their helpful comments on early versions of this paper.
This study was conducted as part of Monica Ordiz-Fuertes's doctoral research at the
University of Oviedo, Spain.

Notes
1 However, Pfeffer (1998) explains that what exists is not necessarily the best. In fact, it is not
clear whether the steel mills that applied a cost strategy could not have obtained better results
using HIW practices instead. This argument is not part of the work we are presenting here, since
this work is aimed exclusively at determining the factors that condition the adoption of such
practices and not at analysing their effectiveness depending on their context.
2 That is, most firms adopt at least a certain proportion of HIW practices.
3 We understand by such environments those where competence intensity is high, technological
change is frequent and barriers to imitation are reduced.

Appendix
The independent variables in the logistic regression are described below:

1 The existence of a recent crisis was measured by a dichotomous variable that scored
from 1 if the company had undergone a crisis in the last five years and scored 0
otherwise.
2 The age of the firm was calculated from the log of the company's age.
3 The activity sector was determined from the Duns & Bradstreet database.
4 Firm size was determined through the item 'company's size with respect to the sector
average' (5 = much lower than the mean and 1 = much higher than the mean). We
 Ordiz-Fuertes and Fernandez-Sanchez: High-involvement practices in HRM 525

analysed its possible influence both by means of objective measures, like 'number of full-
time employees' or 'number of total employees', and by means of subjective measures,
like 'company size related to sector average'. We have taken the latter as reference
because, in the first place, the heterogeneity of the companies that make up the sample
could bias the results and, in the second place, to avoid the problems associated with
existing collioearity between the number of workers and the age of the companies.
5 We identify the competitive strategy following the categorization developed by Porter
(1980), To provide an estimate of a firm's competitive strategy each respondent
indicated what was the basis of its competitive advantage derived from each of the
three generic strategies. Since most Spanish companies' earnings are generated by
a single main product and the survey was focused on the main business ofthe firm, the
study is not biased due to multi-product organizations.
6 The environment rivalry was determined from the item 'level of intensity of
competition in the sector' scored from zero 'very high' through to five 'very low'.
7 To assess organizational culture and leadership style, respondents were given
instructions to mark with an 'x' the particular position on each item's five-point
semantic differential rating scale that best represented their position. The scales
exhibited a coefficient alpha reliability of 0.713 and 0.826 respectively. Figures Al and
A2 present the items considered.
To validate our multi-item scales empirically, we performed confirmatory analysis using
maximum likelihood extraction. Separate factor analyses were performed for culture and
leadership style. The construction of meaningful indices was initiated by the use of
principal component analysis with varimax rotation. Factor analysis was deemed necessary
since it was considered prudent statistically to ascertain whether the adopted measures of
organizational culture and leadership style captured differing dimensions of culture and
leadership style. The principal component analysis of items pertaining to organizational
culture (see Table Al) and items relating to leadership style (see Table A2) were conducted
individually. Factor solutions exhibited an eigenvalue greater than one. As expected, the
factor analysis led to the extraction of one factor that, cumulatively, explained nearly 54 per
cent of the variance in both cases. The scales exhibited a coefficient alpha reliability of
0.826 for leadership style and 0.713 for organizational culture.
The Euclidean measure for distance between cluster centroids and the within-group
average method of forming clusters were used to derive two clusters to differentiate firms
with autocratic leadership (value 0; N = 111) and flexible leadership (value 1; N = 139).
The same process - cluster analysis - was followed with organizational culture.

Cult! The firm is mainly concerned about people. The company's relationships
have an interpersonal character.

Z!u!t2 "When the staff have problems they tum to When the staff have problems
their superiors to solve them. they try to hide them.

Cu!c3 The main strength of the firm is the people, The main strength of the firm
lies in products or services.

Cult4 Change is something natural and necessary. It is not important to meet

nev/ challenges.

Figure A l Organizational culture measures

526 The International Joumal of Human Resource Management

Dirl The management is firm in its decisions. The management listens to the
workers' and trade unions'
opmion.

Dir2 The management defines formal rules and There are no established
policies. procedures to govern what
people do.

Dir3 The management must control information The management must share
because it is a strategic asset. important information with
the workers.

Dir4 The management considers that the key to The management uses
success lies in strong leadership. motivating leadership so that
workers take part in problem
solving.

Dir5 The management thinks workers' autonomy The management thinks

implies a loss of power for the management. responsibility stimulates the
staff to work more and better.

Dir6 The management thinks that higher levels of People are willing to
supervision and control get better results. take risks.

Figure A2 Leadership style measures

Table A l Principal components analysis

Factor loading

Cultl 0.804
Cult2 0.714
Cult3 0.763
CuM 0.763
Eingenvalue 2.179
% variance explained 54.475

Table A2 Principal components analysis of measures

of leadership style
Factor loading

Dir5 0.600
Dir2 0.690
Dir3 0.786
Dir4 0.778
Dir5 0.755
Dir6 0.771
Eingenvalue 3.234
% variance explained 53.902
 Ordiz-Fuertes and Fernandez-Sanchez: High-involvement practices in HRM 527

A dichotomous variable was created to differentiate between firms with an innovative

culture (value 1; N = 140) and those with a bureaucratic culture (value 0, N = 110).
A multivariate analysis of variance was conducted to test that there are no significant
diiferences among the clusters.

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