Human Resources Management and Firm Performance: The DifferentialRole of Managerial Affective and Continuance Commitment

Yaping GongThe Hong Kong University of Science and Technology

Kenneth S. Law and Song ChangThe Chinese University of Hong Kong

Katherine R. XinInternational Institute for Management Development (IMD)

In this study, the authors developed a dual-concern (i.e., maintenance and performance) model of humanresources (HR) management. The authors identified commonly examined HR practices that apply to themiddle manager level and classified them into the maintenance- and performance-oriented HR sub-systems. The authors found support for the 2-factor model on the basis of responses from 2,148 managersfrom 463 firms operating in China. Regression results indicate that the performance-oriented HRsubsystems had a positive relationship with firm performance and that the relationship was mediated bymiddle managers’ affective commitment to the firm. The maintenance-oriented HR subsystems had apositive relationship with middle managers’ continuance commitment but not with their affectivecommitment and firm performance. This study contributes to the understanding of how HR practicesrelate to firm performance and offers an improved test of the argument that valuable and firm-specificHR provide a source of competitive advantage.

Keywords: strategic human resource management, affective commitment, continuance commitment,social exchange, resource-based view

Although extensive research has generally documented a posi-tive relationship between systems of human resources (HR) prac-tices and firm or unit performance, the black box in-between hasreceived less attention (Combs, Liu, Hall, & Ketchen, 2006).Arthur (1994) argued that HR practices may affect firm perfor-mance through developing “committed employees who can betrusted to use their discretion to carry out job tasks in ways that areconsistent with organizational goals” (p. 672). Scholars have re-peatedly called for a better understanding of how HR practicesrelate to firm performance (e.g., Batt, 2002; B. E. Becker &Huselid, 1998; Delery & Shaw, 2001; Takeuchi, Lepak, Wang, &Takeuchi, 2007). Recently, Collins and Clark (2003) examinednetwork ties as the mediator between network-building HR prac-tices and firm performance. Important employee attributes, such ascommitment, have yet to be fully examined (Meyer & Allen, 1997;Ostroff & Bowen, 2000).

The first objective of this study is to advance the understandingof the link between systems of HR practices and firm performanceby examining middle managers’ affective and continuance com-mitment to a firm. Affective commitment refers to an emotionalattachment to a firm such that the committed individual identifieswith, is involved in, and enjoys membership in the firm, whereascontinuance commitment refers to the tendency to stay in a firm onthe basis of the potential loss or costs associated with leaving thefirm (e.g., N. J. Allen & Meyer, 1990; Mowday, Steers, & Porter,1979). Affective commitment is a higher order commitment be-cause it has an affective component and increases motivation toproduce, not just stay (March & Simon, 1958). Drawing upon Katzand Kahn (1978), who suggested that all open systems havemaintenance and production subsystems, we developed a dual-concern model of HR systems. The performance-oriented HRsubsystem focuses primarily on developing HR and providingmotivation and opportunities for the productive use of such re-sources. The maintenance-oriented HR subsystem focuses primar-ily on employee protection and equality. We propose thatmaintenance-oriented HR subsystems are positively related to con-tinuance commitment. Performance-oriented HR subsystems arepositively related to affective commitment, which in turn enhancesfirm performance.

The second objective of this study is to test social exchangetheory (e.g., Blau, 1986; Gouldner, 1960) and the resource-basedtheory (e.g., Barney, 1991) that explore the link between systemsof HR practices and firm performance. Social exchange theorytakes as its particular focus the resources that people obtain from,and contribute to, social interactions (Blau, 1986; Molm, 2001).Exchange parties follow the principles of reciprocity (i.e., the

Yaping Gong, Department of Management of Organizations, The HongKong University of Science and Technology, Hong Kong Special Adminis-trative Region (SAR), China; Kenneth S. Law, Department of Management,The Chinese University of Hong Kong, Hong Kong SAR, China; Song Chang,School of Hotel and Tourism Management, The Chinese University of HongKong; Katherine R. Xin, International Institute for Management Development(IMD), Lausanne, Switzerland.

This article was supported by Research Grants Council of Hong KongGrant HKUST6249/03H.

Correspondence concerning this article should be addressed toYaping Gong, Department of Management of Organizations, School ofBusiness and Management, The Hong Kong University of Science andTechnology, Clear Water Bay, Kowloon, Hong Kong SAR, China.E-mail: mnygong@ust.hk

Journal of Applied Psychology © 2009 American Psychological Association2009, Vol. 94, No. 1, 263–275 0021-9010/09/$12.00 DOI: 10.1037/a0013116

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recipient is obligated to return a benefit to the party who furnishessuch a benefit) and equivalence (i.e., the recipient returns benefitsof equivalent value; Gouldner, 1960). Systems of HR practicesshape the nature of a firm’s exchanges with its employees (e.g.,Morrison, 1996), and employees may reciprocate with differenttypes of commitment to the firm (e.g., D. G. Allen, Shore, &Griffeth, 2003; Blau, 1986). A maintenance-oriented HR sub-system exchanges resources that are at the lower preference orderof managers (e.g., security; Cohen, 1992; England, 1967) and islikely to induce lower order continuance commitment. A perfor-mance-oriented HR subsystem exchanges resources that satisfymanagers’ primary needs (e.g., skill development; Cohen, 1992;England, 1967; Meyer & Allen, 1997) and thus is likely to elicithigher order affective commitment.

The resource-based theory suggests that valuable and firm-specific HR enhance firm performance (e.g., Barney, 1991; Barney& Wright, 1998). Affective commitment by managers shouldincrease firm performance because it is valuable and specific to aparticular firm. Continuance commitment by managers may notincrease firm performance because it is negatively or unrelated tojob performance and thus considered undesirable (Sinclair,Tucker, Cullen, & Wright, 2005). Although strategic HR research-ers have utilized the resource-based theory, few have explicitlytested its key tenet (Barney, 2001). In particular, the firm-specificnature of HR has not been examined. By examining commitmentof managers to a firm, we hope to provide an improved test of thetheory. Our study provides a test of social exchange theory in thecontext of strategic HR research because employee commitment,as a social exchange variable (e.g., Blau, 1986; Wayne, Shore, &Liden, 1997), has not been empirically examined as the linkbetween systems of HR practices and firm performance.

We conducted the study in China. Traditional Chinese personnelmanagement has been characterized by employment security (orthe “iron rice bowl” as some Chinese employees refer to it) andegalitarianism (Ding, Lan, & Warner, 2001). The ongoing market-oriented economic reforms have led to a greater performanceorientation among Chinese firms (Ding & Warner, 2001). With thebackdrop of the economic reforms, we examine how performance-and maintenance-oriented HR subsystems may affect firm perfor-mance in China. This study therefore contributes to theory testingin a non-Western context.

A Dual Concern Model

According to Katz and Kahn (1978), all open systems includemaintenance and production subsystems. The maintenance sub-system preserves the system as a whole, whereas the productionsubsystem yields productive outcomes. The maintenance sub-system is concerned with preserving stability and equilibrium inthe system, and rewards are provided for membership in thesystem. The production subsystem is concerned with task require-ments and develops a dynamics of proficiency. Extending Katzand Kahn’s conception to the HR function, we suggest that an HRsystem serves two overarching functions of performance andmaintenance in managing HR, and therefore it may evolve into twodistinct subsystems: the performance- and maintenance-orientedHR subsystems.

We define the performance-oriented subsystem as a set of HRpractices that primarily develop HR and provide motivation and

opportunities for their productive use. We define the maintenance-oriented subsystem as a set of HR practices that primarily ensuresemployee well-being and equality and is decided in terms of valuesthat are unrelated to input–output ratios. Similar to Katz andKahn’s (1978) open systems theory, a maintenance-oriented HRsubsystem ensures stability of HR, whereas a performance-oriented HR subsystem promotes the productive potential of suchresources. A maintenance-oriented HR subsystem is based on theprinciple of equality and signals that employees have equal valueand rights as members of a firm. The maintenance-performancesubsystem typology is consistent with leadership theories thatprescribe two primary types of leader behavior: initiating struc-tures (e.g., setting performance standards, evaluating, and reward-ing performance) and consideration (e.g., caring about employeewell-being, and treating them as equals; Stodgill & Coons, 1951).Firms may design their performance-oriented HR subsystems topromote performance and their maintenance-oriented HR sub-systems to protect employee well-being and equality.

Performance- and maintenance-oriented HR subsystems playrelatively distinct roles in managing the participation and produc-tion problems that firms face (March & Simon, 1958). In the worksetting, all employees confront two fundamental decisions: thedecision to participate and the decision to produce (March &Simon, 1958). The decision to participate determines whetheremployees choose to continue their membership with the firm; thedecision to produce determines whether they work hard and pro-duce as the firm demands (March & Simon, 1958). Althoughmaintenance-oriented HR practices, such as employment security,may induce the employee to stay, performance-oriented HR prac-tices provide motivation and enabling mechanisms (e.g., throughtraining and participation) so that employees can produce as firmsdemand.

We focus on maintenance- and performance-oriented HR prac-tices among middle managers—a core employee group in firms(Lepak & Snell, 2002). Middle managers play a critical role in theformulation and execution of a firm’s strategy (Floyd & Wool-dridge, 1992). They serve as the linking pin between top managersand the operating core (D. Wang, Tsui, Zhang, & Ma, 2003). Theopening of the Chinese economy (e.g., through World TradeOrganization membership) and the continuous strong economicgrowth in China have created a huge demand for skilled managers(Schafer, 2005). Management education, however, is lagging be-hind the surging demand for trained managers (J. M. Wang, 2006).Middle managers, therefore, are well-sought-after strategic assetsin China. Given the shortage of the strategically important middlemanagers, how firms manage them through systems of HR prac-tices may have important implications on their bottom lines.

Hypotheses Development

We propose that the commitment of middle managers serves asthe link between systems of HR practices and firm performance onthe basis of social exchange theory (e.g., Blau, 1986) and theresource-based theory of the firm (e.g., Barney, 1991). We focuson the affective and continuance commitment of middle managersbut not on normative commitment. Conceptually, affective andcontinuance commitment correspond closely to decisions to pro-duce and to stay (March & Simon, 1958). The strength of themanager’s identification with the goals and values of a firm (i.e.,

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affective commitment) leads to a decision to produce, and the lowdesirability for movement (on the basis of a concern for loss orcontinuance commitment) leads to the decision to stay (March &Simon, 1958). We exclude normative commitment based on socialexchange theory because “. . . [normatively] committed individu-als may exhibit certain behaviors not because they have figuredthat doing so is to their personal benefit, but because they believethat it is the ‘right’ and moral thing to do” (Wiener, 1982, p. 421).Social exchange refers to “actions of individuals that are motivatedby the returns they are expected to bring and typically do in factbring from others” (Blau, 1986, p. 91). Blau (1986) thereforeexplicitly suggested that it is “preferable to exclude conformitywith internalized norms from the purview of the concept of socialexchange” (p. 91).

Maintenance-Oriented HR Subsystem, ContinuanceCommitment, and Firm Performance

According to social exchange theory, the exchange benefit in-cludes not only tangible goods and services but also capacities toprovide socially valued outcomes, such as prestige, approval,status, and recognition (Blau, 1986; Molm, 2001). Exchange par-ties follow the principles of reciprocity and equivalence (Emerson,1976; Gouldner, 1960). The exchange domain refers to a class ofoutcomes of similar nature (i.e., providing similar functions) and isscalable in relative value for the actors in question (Emerson,1987). The value of an exchange domain varies across occupa-tional groups because these groups have different value systems,and the value system is a critical element in understanding thenature of commitment (H. S. Becker, 1960). The nature of middlemanagers’ commitment as a repayment to the firm is thereforecontingent on the value of the exchange domain, which varies withthe intensity of their needs (H. S. Becker, 1960; Gouldner, 1960).

The exchange domain associated with the maintenance-orientedHR subsystem offers factors that are relatively low on the prefer-ence order of managerial employees (e.g., security and equality;Cohen, 1992; England, 1967; Ronen & Sadan, 1984; Starcevich,1972) and are thus likely to elicit the lower order continuancecommitment (Mayer & Schoorman, 1998). Managers generallyhave a strong need for power (Winter, 2002), and status equality isunlikely to satisfy this need. The principle of equivalence in socialexchange suggests that middle managers may reciprocate the ex-change of lower order factors with continuance commitment toensure stable but not necessarily high quality service for the firm.Research suggests that job security increases continuance commit-ment (e.g., Mayer & Schoorman, 1998). In China, where employ-ment security and equality are gradually decreasing (Ding &Warner, 2001), discontinuing one’s current membership createsuncertain prospects of regaining such benefits or protection. Fromthe practical standpoint, middle managers may be induced to havea sense of continuance commitment when the employing firmprovides basic protections, such as employment security andequality.

Continuance commitment “often is assumed to be undesirable,because studies frequently show that it is negatively or unrelated tojob performance and citizenship behavior” (Sinclair et al., 2005, p.1280). Those who stay on the basis of continuance commitmentmay not have the motivation to work hard to produce for the firm(March & Simon, 1958). Meta-analytic findings reveal that con-

tinuance commitment is negatively or unrelated to attendance, taskperformance, and helping behaviors (Meyer, Stanley, Herscovitch,& Topolnytsky, 2002). Continuance commitment is also nega-tively related to supervisor-rated employee promotability and man-agerial potential (Shore, Barksdale, & Shore, 1995). At the firmlevel, continuance commitment does not reduce operating ex-penses (e.g., Angle & Perry, 1981). Overall, we expect that themaintenance-oriented HR subsystem may increase managerialcontinuance commitment, which may not enhance firm perfor-mance. Hence, we hypothesize the following:

Hypothesis 1: The maintenance-oriented HR subsystem ispositively related to continuance organizational commitmentof the middle managers.

Performance-Oriented HR Subsystem, AffectiveCommitment, and Firm Performance

Managers tend to attach a greater value to opportunities forself-expression, prestige, challenges, responsibilities, skill devel-opment, career advancement, recognition, and a sense of personalimportance (Cohen, 1992; England, 1967; Meyer & Allen, 1997;Winter, 2002). These factors are valued by managerial employeesin China as well (Hulme, 2006; Melvin, 2001). Managers developaffective commitment to a firm to the extent that it allows them toachieve important goals and to satisfy their primary needs (Angle& Perry, 1981; Meyer & Allen, 1997). A performance-oriented HRsubsystem may foster managerial affective commitment throughexchange factors that satisfy managers’ primary needs. For exam-ple, through participative decision making in teams, a firm offersmiddle managers opportunities for self-expression and influence,charges them with greater responsibilities, and increases theirsense of personal importance. High selectivity conveys recognitionand approval of the competence of those being selected. Managersalso obtain prestige through association with a selective firm(Blau, 1986). Training constitutes a firm’s investment in middlemanagers’ skill development (Takeuchi et al., 2007). Career de-velopment practices signal a firm’s care for and commitment tomiddle managers’ futures in the firm. To summarize, the exchangedomain associated with the performance-oriented HR subsystemoffers factors at the higher preference order of managers. Theprinciple of equivalence would suggest that middle managers arelikely to reciprocate such exchange factors with the higher orderaffective commitment.

Affectively committed middle managers represent a valuable,relatively rare, and firm-specific resource that is difficult for com-petitors to copy and, thus, should enhance firm performance (Bar-ney, 1991). Affectively committed middle managers are valuablebecause they identify with a firm and its goals—an importantfactor in the decision to produce for the firm (March & Simon,1958). Research suggests that affectively committed employeeshave lower tardiness rates and absenteeism, have higher taskperformance, and are ready to help others (Meyer et al., 2002;Shore & Wayne, 1993). Affective commitment is also positivelyrelated to supervisor-rated promotability and managerial potential(e.g., Shore et al., 1995). At the firm level, affective commitmentenhances administrative efficiency and effectiveness (Ostroff,1992).

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Affectively committed managers are relatively rare in the faceof declining commitment to employing firms (Nussbaum, 1986;Stroh & Reilly, 1997). In the age of protean careers, managershave become more self-directed and willing to change firms tofulfill their career desires (e.g., Stroh & Reilly, 1997). There is asevere shortage of middle managers in China (J. M. Wang, 2006).Many managers have relatively low psychological attachment totheir employing firms, which often experience double-digit turn-over rates (Hulme, 2006; Leininger, 2004). A recent Gallup Pollindicates that among the urban-dwelling Chinese employees, 12%reported that they were engaged (i.e., felt a profound connection totheir firm and worked with passion), whereas 88% felt they werenot engaged or were actively disengaged (Coffman, 2005).

Affectively committed middle managers are difficult-to-imitateresources for three reasons. First, managerial affective commit-ment is specific to a particular firm. Second, although it is easy toentice one or two managers to leave a firm, it is difficult to hireaway a whole group of committed managers. Finally, when agroup of managers is committed to the same firm and its goals,they may engage in facilitative and synergistic interactions amongthemselves—activities that are socially complex (e.g., Barney &Wright, 1998). In sum, the performance-oriented HR subsysteminduces the higher order affective commitment. Affectively com-mitted managers are valuable, relatively rare, and firm-specificresources that are difficult for competitors to copy, and theyshould, according to the resource-base theory (e.g., Barney, 1991),enhance firm performance. Hence, we hypothesize the following:

Hypothesis 2: The relationship between a performance-oriented HR subsystem and firm performance is mediated byaffective organizational commitment of the middle managers.

Method

Sample and Procedure

We surveyed 1,054 firms and obtained usable responses to threesurveys (i.e., a president/vice-president survey, an HR managersurvey, and a middle manager survey) from 463 firms in China.The first source of our sample included 554 firms whose presidentsor vice-presidents attended training courses at a major businessschool in Shanghai. Katherine R. Xin, the instructor of the courses,delivered a package of the three-version surveys to the seniorexecutives who were informed that their participation was volun-tary and that their responses were anonymous. The senior execu-tives completed the president/vice-president survey in class andwere instructed to distribute the HR manager survey to the HRmanager and to select at least two middle managers to completethe middle manager survey. The middle manager survey had 3copies, and additional copies were furnished upon request. Thesurvey instructions to the HR and middle managers stated that theirparticipation was voluntary and that their responses were anony-mous. Each survey was accompanied by a return envelope withprepaid postage for returning the completed surveys to KatherineR. Xin directly. The response rate was 43%.

The second source included corporate clients of a large HRconsulting firm in Shenzhen. Yaping Gong’s connection providedaccess to the consulting firm’s client database, from which 500firms were randomly selected for the study. A 15-member project

team led by Yaping Gong administered the surveys. A package ofthe three-version surveys identical to the one administered to theShanghai participants was distributed to the president or vice-president of the sample firms. Participants from each firm returnedcompleted surveys separately to the project team’s office, whichwas occupied by Yaping Gong. Although team members assistedthe survey administration, they had no access to the completedsurveys. The response rate was 45%.

The president/vice-president survey focused on industry, firmsize, ownership, unionization, and firm performance. The HRmanager survey assessed HR practices for middle managers. Themiddle manager survey assessed HR practices for middle manag-ers, and affective and continuance commitment of middle manag-ers as a whole. The three survey versions were color coded. A totalof 2,148 managers (463 presidents or vice-presidents, 580 HRmanagers, and 1,105 middle managers) provided usable responses.We assigned a unique code to each firm to match surveys from thesame firm. The matching process led to a sample of 463 firms forregressions involving firm performance. We relied on the HRmanagers’ ratings of HR practices, the middle managers’ ratings ofaffective and continuance commitment, and senior executives’ratings of firm performance because of their knowledge of therespective areas being assessed.

Measures

HR practices. To identify commonly examined HR practicesthat apply to middle managers, we reviewed 48 strategic HRstudies published at nine major journals and research volumes, thelist of which are available from Yaping Gong upon request. Thereview revealed nine HR practices that are examined in multiplestudies: employment security, reduction of status distinctions,selective hiring, participation in decision making through teams,performance appraisal, comparatively high pay contingent on per-formance, extensive training, career planning and advancement,and information sharing. We excluded information sharing as anHR practice for managers. First, information sharing is moresignificant to the workforce that has little or no access to keyinformation about the firm. Second, it is not an HR practice per se.Rather it is the outcome of HR practices, such as participation indecision making.

Employment security and reduction of status distinctions fit intothe maintenance-oriented HR subsystem because they protect em-ployee well-being and equality and are decided in terms of valuesunrelated to input–output ratios. Employment security and statusequality are decreasing in China because of the market-orientedeconomic reforms. Employees may choose to stay because of aconcern for losing such protections. Both practices therefore mayinduce employees to stay and ensure a stable supply of HR. Theremaining six HR practices were classified into the performance-oriented HR subsystem, which develops a firm’s HR and motivatesand enables their productive use. Selective hiring and extensivetraining develop a firm’s human resource pool. Comparativelyhigh pay contingent on performance, career planning and advance-ment, and performance appraisal for pay and promotion purposesmotivate employees to produce. Participation in decision makingthrough teams provides a structural mechanism that enables em-ployees to produce for the firm. For nonmanagerial employees,such a practice may suggest an egalitarian and protective orienta-

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tion. We focus on managers who make decisions on a routinebasis. Participation in decision making through teams does notsuggest an equality and protection focus but is instead mainly usedto collect diverse input so that higher quality decisions can bemade. We thus classify such participation into the performance-oriented HR subsystem.

We developed six items for each of the eight HR practices. Weused items from existing studies (e.g., Delery & Doty, 1996) whenavailable. To ensure equivalence of the measures in the Chineseand the English versions, we performed a standard translation andback-translation procedure (Brislin, 1980). Respondents rated theitems on a 7-point scale (1 � strongly disagree, 7 � stronglyagree). Following Hinkin (1998) and Fabrigar, Wegener, MacCal-lum, and Strahan (1999), we initially conducted an exploratoryfactor analysis (EFA) with maximum likelihood extraction andpromax rotation in the middle manager sample. Results indicatenine factors. Table 1 presents the full set of items and factorloadings. Six items did not load high (�.40) on the eight HRpractices and were subsequently dropped.

We performed confirmatory factor analysis (CFA) to test thehypothesized two-factor (i.e., maintenance and performance)structure for the eight HR practices in the HR manager sample. Onthe basis of the EFA results for the eight HR practices, we parceledtogether the two items with the highest and lowest loadings, andtwo items with the second highest and lowest loadings, and soforth. This method is appropriate because the EFA results indicatethe unidimensionality of each HR practice (Landis, Beal, &Tesluk, 2000). The CFA results indicate an acceptable fit: �2(243,N � 580) � 1,135.12, p � .01, root-mean-square error of approx-imation (RMSEA) � .06, normed fit index (NFI) � .91, non-normed fit index (NNFI) � .92, comparative fit index (CFI) � .93,goodness-of-fit index (GFI) � .92. All the first-order factors (i.e.,the eight HR practices) loaded on the corresponding second-orderfactors (i.e., the maintenance- and performance-oriented HR fac-tors) with loadings at .50 or higher. We compared the one- andtwo-factor models for the HR practices. The two-factor model fitthe data significantly better than the one-factor model, ��2(1, N �580) � 43.30, p � .01. The Cronbach’s alphas were .70 and .93 forthe maintenance- and performance-oriented HR factors, respec-tively.

We calculated rwg (James, Demaree, & Wolf, 1984, 1993) toassess the agreement of the HR and middle managers’ ratings. Themean rwg values for the maintenance- and performance-orientedHR practices were .90 and .91, respectively. We also calculated anintraclass correlation (ICC [1]) to assess the reliability of the HRmanager’s ratings. ICC (1) values for the maintenance- and per-formance-oriented HR scales were .44 and .46, respectively,higher than the median value of .12 observed by James (1982).Finally, ICC (2) values for the maintenance- and performance-oriented HR practices were .61 and .64, respectively. Overall, rwg,ICC (1), and ICC (2) were comparable with the median or recom-mended values reported in the literature (George & Bettenhausen,1990; Glick, 1985; Schneider, White, & Paul, 1998), suggestingthat HR managers provided reliable assessment of HR practices.

Affective and continuance commitment. We adopted Meyer,Allen, and Smith’s (1993) measure, which was translated intoChinese and validated by Chen and Francesco (2003). We fol-lowed the referent shift model (e.g., Chan, 1998) by asking re-spondents to rate the affective and continuance commitment of

middle managers as a whole on a 7-point scale. We assessed rwg,ICC (1), and ICC (2) before we aggregated the respondents’ratings. We mainly relied on the rwg statistic because justificationfor aggregation is based on agreement within groups rather than ondifferences across groups (George, 1990; Schneider & Bowen,1985). The mean rwg value was .82 for affective and continuancecommitment, indicating support for aggregation. On the otherhand, Gerhart, Wright, McMahan, and Snell (2000) recommendedICC (1) for strategic HR research. The ICC (1) values were .35 and.30 for affective and continuance commitment, respectively. Fi-nally, Bliese (2000) recommended ICC (2) in addition to rwg andICC (1). ICC (2) values were .50 and .40 for affective andcontinuance commitment, respectively. ICC (2) is highly depen-dent on the number of raters from each group, and the smallnumber of middle managers per firm may have adversely affectedthe ICC (2) values obtained in our sample (Bliese, 1998; James,1982). The ICC (2) values were very similar to those reported, forexample, by Schneider et al. (1998). The ICC (2) values did not“. . . seem low enough to prohibit aggregation” (Schneider et al.,1998, p. 155), especially given the rwg and ICC (1) values. TheCronbach’s alphas were .87 and .79 for affective and continuancecommitment, respectively.

As a further check of construct-related validity, we comparedthe four-factor baseline model (i.e., maintenance- and perfor-mance-oriented HR factors, and affective and normative commit-ment) with four alternative models, all using the middle managers’ratings. Table 2 summarizes the model comparison results. Thefour-factor model had the best fit. The two HR factors are distinctfrom each other and from the mediators. Affective and continuancecommitment were also distinguishable from each other and thusmore appropriately treated as different variables rather than anoverall commitment variable.

Firm performance. The president or vice-president rated firmperformance relative to competitors in the industry (ranging from1 � the lowest 20% to 5 � the highest 20%) on seven aspects: (a)profit, (b) total sales growth, (c) market share, (d) total assetgrowth, (e) after-tax return on total assets, (f) after-tax return ontotal sales, and (g) labor productivity. Theoretically, we wereinterested in competitive advantage accruing to firms on the basisof their HR practices, and “relative performance is ultimately whatis of the greatest interest” (Fulmer, Gerhart, & Scott, 2003, p. 971).Practically, objective performance data are difficult to obtain andare often inaccurate in China. Chinese accounting standards arestill emerging, and firms may use different accounting standards,which makes it impossible to obtain comparable financial perfor-mance information. Because of the cross-industry nature of oursample, it is difficult to interpret and compare the absolute objec-tive performance of the sample firms. Prior strategic HR studies(e.g., Delaney & Huselid, 1996; Harel & Tzafrir, 1999; Youndt,Snell, Dean, & Lepak, 1996) have used relative firm performancemeasures similar to ours.

The EFA (maximum likelihood extraction and promax rotation)results reveal that the seven items loaded clearly on one factor,indicating that they capture the general firm performance constructunderlying the dimensions. We therefore averaged the seven items.We asked the HR and middle managers the same firm performancequestions. The correlations among the three sources ranged from.62 to .66, indicating high interrater reliability. The mean rwg, ICC

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Table 1Exploratory Factor Analysis Results of HR Practices (Middle Manager Rating)

Type of HR practice

Factors

1 2 3 4 5 6 7 8 9

Employment security1. Managers in our firm can expect to stay for as

long as they wish. .08 .05 �.12 .03 .00 .53 �.16 .06 �.102. Our firm tries to avoid dismissing managers. .00 .02 �.07 �.01 .05 .62 �.06 .03 .033. Job security is almost guaranteed to managers in

our firm. �.09 .08 .01 �.02 �.02 .73 .03 �.01 .014. If our firm were facing economic problems,

managers would be the last to get cut. .01 �.02 �.05 .08 .02 .44 �.08 .01 �.075. Our firm has offered managers a pledge of

employment security. �.04 �.07 .15 .02 .03 .53 .22 �.02 �.086. Compared to our close competitors, our firm

offers higher employment security to managers. .04 �.07 .05 .02 .06 .60 .08 �.07 .16Reduction of status distinction

7. In our firm, managers at different levels sharethe same cafeteria. �.09 .27 �.07 .05 �.06 .08 �.10 .47 .07

8. In our firm, managers at different levels have acommon uniform. .08 .10 �.13 .05 �.01 .02 �.04 .43 .02

9. In our firm, managers at different levels use thesame company vehicles for business purposes. .05 �.10 .00 .01 �.01 �.03 .11 .71 .04

10. In our firm, managers at different levels stay inhotels of similar standards on business trips. .05 �.11 .08 �.03 .01 .01 .14 .59 .03

11. The rights of managers at different levels areequally respected in our firm. .00 �.07 .09 �.04 �.05 �.02 �.01 .11 .85

12. Compared to our close competitors, our firmrespects more the equal rights of managers atdifferent levels. .10 .07 �.04 �.07 �.03 �.03 �.07 �.01 .88

Selective hiring13. For the five managerial positions that our firm

hires most frequently, we have many qualifiedapplicants per position. .20 �.02 .47 �.06 �.12 .16 .04 �.02 �.06

14. All newly hired managers in our firm had beenselected based primarily on the results ofvalidated selection tests. �.01 .01 .74 �.12 �.05 .01 .09 �.11 .10

15. All managers are administered many assessmenttools—including personality, aptitude, and skilltests—prior to employment in our firm. .10 �.03 .77 �.02 �.08 �.02 �.01 �.06 .00

16. A strict selection procedure was used in ourfirm to hire new managers. �.05 .05 .83 �.04 .09 �.12 �.06 .01 .00

17. It is difficult to pass our managerial selectionprocess. �.13 .11 .58 .11 .11 .01 �.11 .12 �.09

18. Compared to our close competitors, our firm ismore selective in hiring managers. �.04 �.02 .58 .18 .07 �.10 .01 �.01 .05

Participation in decision making through teams19. A majority of managers participate in highly

decentralized work groups in our firm. .09 .00 .17 .10 .17 .08 .00 �.01 .1620. A majority of managers in our firm are involved

in formal or informal management committeesor other related problem-solving activities. .24 �.08 .10 �.02 .42 .04 .02 .04 �.03

21. A majority of managers receive training ingroup problem solving. .37 .16 .16 �.03 .29 .02 �.12 .03 �.07

22. Managers in our firm meet on a regular basis inmanagement committees to discuss criticalcompany matters. �.06 .07 .05 �.09 .88 .04 �.04 .00 �.07

23. Management committees in our firm can exertsignificant influence on major companydecisions. �.06 �.03 �.06 .01 .86 .02 .08 �.04 �.01

24. Compared to our close competitors, our firmrelies more heavily on decentralizedmanagement committees to make majordecisions. .18 �.08 .01 .15 .42 �.02 �.01 �.04 .15

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Table 1 (continued )

Type of HR practice

Factors

1 2 3 4 5 6 7 8 9

Comparatively high pay contingent on performance25. Compensation for managers in our firm is above

the market average. �.09 �.09 .20 .62 �.09 .07 .04 .09 .0226. A large proportion of our managers’ total

compensation is accounted for by cash plusdeferred bonuses. �.05 .11 .00 .59 �.04 .05 �.18 .08 �.08

27. Managers are eligible for annual deferredincentive plans, profit-sharing plans, and/orgain-sharing plans in our firm. .04 .01 �.02 .61 .12 �.03 .02 �.04 �.09

28. Managers own a large amount of the shares ofour firm. .19 �.14 �.17 .45 .06 �.05 .18 �.07 �.04

29. The incentive pay of managers in our firmmatches well with our firm’s financial perfor-mance. �.09 .20 �.08 .53 .15 �.11 .01 �.05 .06

30. Compared to our close competitors, the averagetotal employment cost per manager is larger inour firm. .06 �.07 .04 .63 �.17 .11 .05 .01 .00

Extensive training31. New managers in their first year of employment

typically receive long hours of training in ourfirm. .51 .02 .20 .08 �.06 �.02 �.05 �.05 .08

32. Experienced managers (i.e., those employedmore than one year) typically receive long hoursof training per year in our firm. .65 .02 .07 .14 �.04 �.02 �.01 .02 �.04

33. A large proportion of managers in our firm arequalified to perform more than one job throughtraining or job rotation. .50 .08 .02 �.04 .00 .05 .07 .01 .05

34. Managers often participate in cross-functionaltraining or job rotation in our firm. .83 �.01 �.03 �.08 .01 .02 �.03 .01 .00

35. Managers in our firm often receive trainingoutside their own functional areas. .88 �.01 �.10 �.06 .04 �.03 .00 .11 �.02

36. Compared to our close competitors, our firmoffers more extensive training to managers. .48 .01 �.05 .02 �.08 �.03 �.04 �.03 .12

Career planning and advancement37. Many managerial positions in our firm are filled

from within. �.04 .26 �.16 .08 .12 .09 �.08 .03 .1638. Managers are promoted based on merit rather

than seniority in our firm. �.11 .22 .00 .02 .14 �.07 .15 .08 .2739. Managers have clear career paths within our

firm. .06 .01 .06 �.06 .04 �.08 .78 .07 �.0940. Managers have a very bright future within our

firm. �.09 .11 .01 .00 .02 .03 .71 .06 .0441. Managers’ career aspirations within our firm are

known by their superiors. �.03 .02 .00 .02 .01 �.04 .85 .03 �.0642. Compared to our close competitors, managers in

our firm have better career prospects within thefirm. .03 .21 �.12 .07 �.05 .03 .60 �.10 .10

Performance appraisal43. Managers regularly receive formal performance

appraisals in our firm. �.06 .89 .00 �.06 .02 .06 �.07 �.01 .0144. Managers’ performance appraisals are based on

objective, quantifiable results in our firm. �.04 .84 .09 �.13 .04 .01 .04 .06 �.0145. Managers often receive development-focused

appraisals in our firm. .07 .56 .06 �.05 .03 �.02 .25 �.02 �.0546. Managers often receive appraisals for pay

purposes. .10 .64 .04 .15 �.09 �.04 .00 .07 �.0747. Managers often receive appraisals for promotion

purposes. .23 .50 .04 .07 �.07 �.01 .12 �.02 �.0848. Compared to our close competitors, our firm has

a better-designed performance appraisal system. .15 .55 .01 .11 �.06 �.01 .04 �.12 .11Eigenvalue 9.01 9.03 8.86 7.64 7.47 3.14 9.94 1.92 7.23Percentage of variance explained 28.19 5.73 4.62 4.18 3.55 3.28 3.07 2.72 2.40

Note. N � 1,105. The nine factors explained 57.74% of the variance. HR � human resources.

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(1), and ICC (2) values were .89, .59, and .82, respectively. TheCronbach’s alpha was .86.

Control variables. We controlled for firm size (i.e., number ofemployees), industry, ownership, and unionization (i.e., percent-age of employees who are union members; Guthrie, 2001; Huselid,1995; Youndt et al., 1996). Larger firms may have a greater marketpower and a larger resource base (Barney, 1991; Collins & Clark,2003). Industries vary in their attractiveness (i.e., opportunities andthreats) and that variability affects the performance of firms (Por-ter, 1985; Scherer, 1980). In China, firms of different ownershiptypes have different access to financial capital and different expo-sure to market forces. Unions may lead to inflexible operations,but they provide a channel for voice and thus stabilize employmentrelationships and improve morale (Freeman & Medoff, 1984).Finally, we controlled for middle managers’ job satisfaction (i.e.,managerial job satisfaction) as rated by the president or vice-president. The scale has one item, “Overall, middle managers as a

whole are satisfied with their jobs in this organization” (1 �strongly disagree, 7 � strongly agree). In a recent meta-analysis,Judge, Thoresen, Bono, and Patton (2001) concluded that thesatisfaction–performance relationship “does not appear to be acorrelation that should generally be dismissed” (p. 389). Theaverage number of employees was 865 in the sample firms. Thesample included 40% manufacturing firms, 34% service sectorfirms, 15% high technology firms, and 11% unclassified firms. Interms of ownership, the sample included 46% domestic privatefirms, 21% wholly foreign owned firms, 15% joint ventures, 13%state-owned firms, and 5.5% unclassified firms. The averageunionization rate was 34.84% in the sample of firms.

Results

Table 3 presents the means, standard deviations, and correla-tions of the study variables. To test the hypotheses, we followed

Table 2Comparison of Measurement Models (Middle Manager Rating)

Model No. of factors �2 df ��2 RMSEA NFI NNFI CFI GFI

Baseline model Four factors 632.86 71 .08 .90 .88 .91 .92Model 1 Three factors: Maintenance

HR � Performance HR;AC; CC

703.18 74 70.32�� .09 .88 .87 .90 .91

Model 2 Three factors: MaintenanceHR; Performance HR;AC � CC

939.86 74 307.00�� .10 .85 .82 .86 .89

Model 3 Two factors: MaintenanceHR � Performance HR;AC � CC

998.80 76 365.94�� .11 .84 .82 .85 .89

Model 4 One factor: MaintenanceHR � Performance HR� AC � CC

2,032.16 77 1,559.81�� .17 .64 .59 .65 .74

Note. RMSEA � root-mean-square error of approximation; NFI � normed fit index; NNFI � non-normed fit index; CFI � comparative fit index; GFI �goodness-of-fit index; HR � human resources; AC � affective commitment; CC � continuance commitment.�� p � .01.

Table 3Means, Standard Deviations, and Correlations of the Study Variables

Variable M SD 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

1. Firm sizea 5.45 1.46 —2. Unionization 34.84 83.17 .16 —3. Manufacturing .32 �.06 —4. High-tech �.07 .10 �.34 —5. Service �.26 �.08 �.58 �.30 —6. Unknown ownership .02 .08 �.09 �.02 .03 —7. Joint venture .08 .02 .12 .00 �.09 �.11 —8. Private firm �.29 �.16 �.24 .06 .27 �.26 �.38 —9. State-owned firm .21 .27 �.09 �.06 �.04 �.10 �.16 �.35 —

10. Managerial job satisfaction 5.02 1.28 .02 .01 �.02 �.01 .01 .04 .06 �.07 �.01 —11. Maintenance-oriented HR 4.30 0.89 �.01 �.03 �.03 .08 �.01 .04 �.05 �.08 .16 .12 —12. Performance-oriented HR 4.45 0.84 �.03 �.05 �.01 �.02 .09 �.07 .04 .06 �.03 .33 .35 —13. Affective commitment 4.04 0.99 .10 .06 �.01 .03 �.06 .09 .07 �.09 .11 .51 .21 .35 —14. Continuance commitment 4.16 0.95 .04 .02 �.06 �.05 .07 .05 .00 �.02 .10 .24 .30 .22 .45 —15. Firm performance 3.26 0.73 .18 .10 .01 .12 �.20 .05 .03 �.14 .09 .14 .11 .14 .23 .06 —

Note. N � 463 (listwise). Correlations with the absolute value greater than .09 are significant at p � .05; correlations with the absolute value greater thanor equal to .12 are significant at p � .01 (two-tailed test). HR � human resources.a Logarithm of total number of employees.

270 RESEARCH REPORTS

Baron and Kenny’s (1986) procedure to estimate three regressionequations: (a) affective and continuance commitment regressed onthe two HR factors, (b) firm performance regressed on the two HRfactors, and (c) firm performance regressed on the two HR factorsplus affective and continuance commitment. We controlled forindustry, firm size, unionization rate, ownership, and managerialjob satisfaction in all analyses.

Table 4 presents the regression results for testing the two hy-potheses. The results indicate that the performance-oriented HRsubsystem was positively related to affective commitment (� �.30, p � .01; 95% CI � .24–.46) and continuance commitment(� � .13, p � .01; 95% CI � .04–.26). The maintenance-orientated HR subsystem was positively related to continuancecommitment (� � .25, p � .01; 95% CI � .16–.36) but not toaffective commitment, supporting Hypothesis 1. The Wald F testthat used Stata 8.0 showed that the performance-oriented HRsubsystem had a stronger relationship with affective commitmentthan did the maintenance-oriented HR subsystem: F(1, 467) �10.25, p � .01.

Model 2 in Table 4 indicates that the performance-oriented HRsubsystem was positively related to firm performance (� � .14,p � .05; 95% CI � .02–.19), but the maintenance-oriented HRsubsystem was not. When the two commitment variables wereadded to the equation in Model 3, the relationship between theperformance-oriented HR subsystem and firm performance was nolonger significant. Affective commitment was significantly relatedto firm performance (� � .16, p � .01; 95% CI � .05–.20),whereas continuance commitment was not. Overall, the resultsindicate that affective commitment is a mediator for the perfor-mance-oriented HR subsystem (Hypothesis 2). We further con-ducted a Sobel test (Sobel, 1982; see also Preacher & Hayes,

2004). The results indicate that the relationship between the per-formance-oriented HR subsystem and firm performance was me-diated by affective commitment (zsobel � 2.71, p � .01) but not bycontinuance commitment (zsobel � 0.72, ns).

Finally, we used LISREL 8.3 (Joreskog & Sorbom, 1993) toconduct structural equation modeling. On the basis of the CFAresults for the HR practices, we specified employment security andstatus equality as indicators for the maintenance-oriented HRfactor, and the rest as indicators for the performance-oriented HRfactor. For affective and continuance commitment, we parceledtogether the two items with the highest and lowest loadings (on thebasis of the EFA), and the two items with the next highest andlowest loadings, and so forth (Landis et al., 2000). For firmperformance, we followed the same approach to form the first andsecond parcels, but we combined together the remaining threeitems for the third parcel. Affective and continuance commitmentwere allowed to be correlated because of their significant correla-tion. Finally, we specified paths from the control variables to themediators and the dependent variable.

We tested a full and a partial mediation model following James,Mulaik, and Brett (2006) and Schneider, Ehrhart, Mayer, Saltz,and Niles-Jolly (2005). Figure 1 presents the results for the fullmediation model. The fit of the model was adequate: �2(181, N �463) � 467.84, p � .01, RMSEA � .06, NFI � .89, CFI � .92,GFI � .91. The performance-oriented HR system was positivelyrelated to affective commitment (� � .34, p � .01). Themaintenance-orientated HR system was positively related to con-tinuance commitment (� � .55, p � .01). Affective commitmentwas positively related to firm performance (� � .19, p � .01), andcontinuance commitment was not. The partial mediation model,which included direct paths from the performance- and

Table 4Regression Analyses for Hypotheses Testing

PredictorAffective

commitmentContinuancecommitment

Firm performance

Model 1 Model 2 Model 3

Control variablesManufacturing �.10 (.15) �.09 (.15) �.20� (.12) �.22�� (.12) �.22�� (.12)High-tech �.04 (.17) �.09 (.17) �.01 (.13) �.03 (.13) �.03 (.13)Service �.15� (.15) �.02 (.15) �.26�� (.12) �.29�� (.12) �.27�� (.12)Joint venture .13� (.14) .06 (.14) �.02 (.11) �.02 (.11) �.04 (.11)Private firm .08 (.12) .08 (.12) �.06 (.09) �.07 (.09) �.08 (.09)State-owned firm .15� (.17) .06 (.17) �.01 (.13) �.03 (.13) �.05 (.13)Unknown ownership .16�� (.19) .08 (.18) .02 (.15) .02 (.15) �.00 (.15)Firm sizea .07 (.03) .06 (.03) .16�� (.03) .16�� (.02) .15�� (.02)Unionization .01 (.00) .01 (.00) .04 (.00) .05 (.00) .05 (.00)Managerial job satisfaction .10� (.04) .01 (.04) .15�� (.03) .10� (.03) .08 (.03)

HR practicesMaintenance-oriented HR .07 (.05) .25�� (.05) .05 (.04) .05 (.04)Performance-oriented HR .30�� (.05) .13�� (.05) .14� (.04) .08 (.04)

Managerial commitmentContinuance commitment �.05 (.04)Affective commitment .16�� (.04)

�R2 .12�� .10�� .03�� .03��

dfs 12,464 12,464 10,452 12,450 14,448n 477 477 463 463 463

Note. Standardized regression coefficients are presented. Standard errors are in parentheses. HR � human resources.a Logarithm of total number of employees.� p � .05. �� p � .01.

271RESEARCH REPORTS

maintenance-oriented HR subsystems to firm performance, did notimprove fit, ��2(2, N � 463) � 3.1, ns. The full mediation modelwas thus preferred. Overall, the results support Hypotheses 1 and2. Finally, we obtained the indirect effects using LISREL 8.3(Joreskog & Sorbom, 1993). The indirect effect of maintenance-oriented HR practices on firm performance through affective andcontinuance commitment was .02 (t � 0.44, ns), whereas that ofperformance-oriented HR practices was .07 (t � 2.32, p � .02).

Discussion

The objectives of this study were to examine how HR practicesrelate to firm performance and to test the resource-based theoryand social exchange theory in such an examination. To achieve theobjective, we theoretically derived a dual-concern model of HRsubsystems. Results from factor analyses and measurement modelscomparison support the two-factor structure of HR practices. Re-gression results indicate that the performance-oriented HR sub-system was positively related to firm performance, and the rela-tionship was mediated by affective commitment. In contrast, themaintenance-oriented HR subsystem had no significant relation-ship with firm performance. It had a significant and positiverelationship with continuance commitment but not with affectivecommitment. In what follows, we discuss the current findings inrelation to those from other studies, and we also discuss theimplications of the findings for strategic HR theory and research.

In this study, performance- and maintenance-oriented HR prac-tices explained 12% and 10% of the variance in affective andcontinuance commitment, respectively, in a sample of firms oper-ating in China. The amount of additional variance explained iscomparable with, if not larger than, that found in studies conductedin the West. For example, employee perception of three employ-ment practices explained 10% additional variance in affectivecommitment in Gaertner and Nollen’s (1989) study. Family-friendly human resource practices explained 1.4% additional vari-ance in affective commitment in Grover and Crooker’s (1995)study. In this study, HR practices explained 3% additional variancein firm performance, which is similar to that found in a number ofstudies that used similar firm performance measures. For example,HR practices explained 3% additional variance in perceived firmperformance in Delaney and Huselid’s (1996) study and Harel andTzafrir’s (1999) study. Because these studies used a single sourceto rate HR practices and firm performance, which tends to inflatethe obtained effect size, the 3% variance explained in the current

study is at least comparable. The implication is that HR practicesare just as important, if not more important, in shaping employeecommitment and firm performance in China as they are in theWest.

This study provides the first empirical examination of manage-rial commitment as a link between systems of HR practices andfirm performance, and the results are consistent with the resource-based theory and social exchange theory. Strategic HR researchershave noted that the mechanism by which HR practices affect firmperformance has not received much research attention. The insuf-ficient attention is problematic because it limits the understandingof how HR practices relate to firm performance, and it renderstheory testing inadequate. The current study, together with a num-ber of recent empirical studies (e.g., Collins & Clark, 2003; Takeu-chi et al., 2007), moves the field a step forward in understandinghow HR practices may relate to firm performance. This studyprovides an empirical test of strategic HR models proposed byscholars (e.g., B. E. Becker & Huselid, 1998; Ostroff & Bowen,2000). Ostroff and Bowen (2000) have proposed that HR practicesshape employees’ collective attitudes, such as organizational com-mitment, which in turn influences firm performance. In view ofthis study’s findings, their model may be refined to accommodatethe different roles of affective and continuance commitment. Be-cause affective commitment reflects the motivational aspect ofHR, this study also provides support for theoretical models thatposit that motivation is a potential mediator between systems ofHR practices and firm performance (e.g., B. E. Becker & Huselid,1998; Delery & Shaw, 2001).

The current study adds to the empirical tests of the resource-based theory. Affectively committed employees represent a valu-able, relatively rare, and difficult-to-imitate resource. Affectivecommitment is also specific to a particular firm. Prior strategic HRresearch generally did not measure the firm-specificity of re-sources. The examination of affective commitment thus providesan improved way to test the resource-based theory. Furthermore,our findings suggest that firm-specific resources do not alwaysenhance performance. Although managerial affective commitmentmay enhance firm performance, continuance commitment maynot. Finally, in this study we tested the basic tenet of socialexchange theory, which is that employees reciprocate exchangeresources offered by a firm with commitment to the firm. Consis-tent with the exchange principle of equivalence, employees returncommitment of different natures on the basis of the resourcesoffered in the exchange process.

This study offers empirical contributions to strategic HR re-search. First, we focused on HR practices for middle managers.HR practices vary considerably across employee groups (Lepak &Snell, 1999). By focusing on one relatively homogeneous groupthat is likely to be covered by similar HR practices, our measure ofHR practices should be more reliable than those for the whole unitor firm, which may include multiple employee groups covered bydifferent HR practices (e.g., Huselid, 1995). Second, few priorstudies cross-validated their HR measures in different sampleswithin the same study design. In this study, we generated the factorstructure for HR practices in the middle manager sample andcross-validated it in the HR manager sample. The size of themiddle manager sample is large and therefore likely to give astable factor structure. Third, prior studies typically relied on asingle source to rate HR practices (e.g., Arthur, 1994; Batt, 2002;

.55**

.34** .19**Performance-Oriented HR

Maintenance-Oriented HR

AffectiveCommitment

Continuance Commitment

FirmPerformance

.12

-.02

-.01

.58** .54**

Figure 1. Structural equation modeling results for the full mediationmodel. Control variables were included in the analysis but are not shownfor simplicity. N � 463; �� p � .01; HR � human resources.

272 RESEARCH REPORTS

Delery & Doty, 1996; Guthrie, 2001; Huselid, 1995), which maylead to significant measurement errors (Gerhart et al., 2000). Inthis study, we used two different sources to rate HR practices, andwe obtained good interrater agreement. Finally, we used threedifferent sources to rate HR practices, managerial commitment,and firm performance, respectively. The multisource design tappedinto respondents’ information about respective variables. It alsoreduced the potential consistency bias, which may have occurredin prior studies that relied on a single respondent (e.g., Bae &Lawler, 2000; Batt, 2002; Delaney & Huselid, 1996; Harel &Tzafrir, 1999).

This study is not without limitations. First, we focused on afirm-specific attitudinal attribute of managers. Future research mayempirically examine firm-specific human capital as a mediator.We also recognize that measuring firm-specific human capital is athorny issue for strategic HR researchers. Because affectivelycommitted employees have the motivation to develop firm-specifichuman capital, affectively committed employees may provide aproxy for firm-specific human capital and thus hold the key tounderstanding the role of HR in firm performance. Second, weused a subjective firm performance measure. Future research mayalso include objective measures, particularly when a study isconducted within a single industry or in countries where suchmeasures are reliable. Third, we did not establish causality amongHR practices, managerial commitment, and firm performance inthis cross-sectional study. Although the relationships weregrounded in theory, a longitudinal design is desired for the empir-ical test. Finally, we conducted the study in China, which maylimit the generalization of some of our findings to other places. Wefound that the maintenance-oriented HR subsystem consisting ofemployment security and status equality was unrelated to firmperformance. Employment security has gradually lost its appeal inChina after decades of economic reforms. Status equality may notbe preferred by managers in China because of the relatively highpower distance culture. Future research may replicate this study inother countries.

Despite the limitations, this study contributes to the currentunderstanding of the link between HR practices and firm perfor-mance, and it provides an improved test of the resource-basedtheory of the firm. It shows that HR practices can be meaningfullyclassified into the performance- and maintenance-oriented sub-systems. The performance-oriented HR subsystem can increasefirm performance through enhancing managerial affective commit-ment. The maintenance-oriented HR subsystem increases contin-uance commitment but does not enhance firm performance. Futuretheory building may benefit from considering the nature of com-mitment. With limited resources, firms may benefit more frominvesting in their performance-oriented HR subsystem.

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Received September 27, 2007Revision received May 23, 2008

Accepted June 2, 2008 �

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