Unlocking the full potential of absorptive capacity: the systematic effects of high commitment work systems

Integrating perspectives of absorptive capacity and strategic human resource management, we examine how high commitment work systems (HCWS) affect a firm’s absorptive capacity and subsequent new product and service performance. We posit that HCWS act as an antecedent of a firm’s absorptive capacity—the organizational ability to acquire, assimilate, transform and exploit knowledge. We also posit that HCWS strengthen the positive relationship between absorptive capacity and new product and service performance. Results from a sample of 198 firms support the major contention. This study shows that a firm’s realized absorptive capacity partially mediates the relationship between potential absorptive capacity and new product and service performance. In the process of a firm’s deploying absorptive capacity to enhancing new product and service performance, HCWS exhibit distinctive strategic value. They not only play an organizational capability-building role that fosters a firm’s absorptive capacity, but may also play an efficiency-enhancing role that facilitates the process of transforming absorptive capacity into superior new product and service performance. This study sheds light on how human resource practices affect the development and effectiveness of organizational capabilities.