Kim 2016

The International Journal of Human Resource
Management
ISSN: 0958-5192 (Print) 1466-4399 (Online) Journal homepage: http://www.tandfonline.com/loi/rijh20
The relationships among participatory

management practices for improving firm
profitability: Evidence from the South Korean
manufacturing industry
Andrea Kim, Kyongji Han & Yongguen Kim
To cite this article: Andrea Kim, Kyongji Han & Yongguen Kim (2016): The relationships among
participatory management practices for improving firm profitability: Evidence from the South
Korean manufacturing industry, The International Journal of Human Resource Management,
DOI: 10.1080/09585192.2016.1239218
To link to this article: http://dx.doi.org/10.1080/09585192.2016.1239218
Published online: 03 Oct 2016.
Submit your article to this journal
Article views: 18
View related articles
View Crossmark data
Full Terms & Conditions of access and use can be found at

http://www.tandfonline.com/action/journalInformation?journalCode=rijh20
Download by: [Cornell University Library] Date: 21 October 2016, At: 00:20
The International Journal of Human Resource Management, 2016
http://dx.doi.org/10.1080/09585192.2016.1239218
The relationships among participatory management

practices for improving firm profitability: Evidence from
the South Korean manufacturing industry
Andrea Kima, Kyongji Hanb and Yongguen Kimc
a
Business School, Sungkyunkwan University, Seoul, South Korea; bHankamer School of Business,
Baylor University, Waco, U.S.A; cCenter for Management Research, POSCO Research Institute, Seoul,
South Korea
ABSTRACT KEYWORDS
Following an internal fit perspective, this research aims to Employee involvement;
explore diverse patterns of relationships among human internal fit; manufacturing
resource (HR) practices in relation to financial performance of organizations; participation;
manufacturing organizations in South Korea. We specifically return on equity;
strategic human resource
focus on participatory management practices prevalent in management
manufacturing organizations, and drawing on ownership
theories, we then classify them into involvement-oriented
and equity-oriented practices. By analyzing a multi-
source data-set of 333 South Korean large manufacturing
organizations, it is substantiated that involvement-oriented
practices not only have additive associations with one
another, but also positively interact with equity-oriented
practices in relation to the organizations’ return on equity.
Our research helps to elucidate how HR practices interact to
realize their performance-improving impacts. Compared to
existing evidence in the Western context, our findings also
call attention to contextual differences in understanding the
effectiveness of HR practices in an international context.
Introduction
Over recent decades, research examining the relationships between human
resource (HR) practices and organizational performance has rapidly increased
(Huselid & Becker, 2011; Lepak & Shaw, 2008). Drawing on a system perspective,
those macro level studies have assumed that diverse HR practices incorporated
into an HR system have additive relationships in supporting the achievement of
organizational goals (Wright & McMahan, 1992). This line of research has sug-
gested various bundles of HR practices, which were dubbed high-performance
work systems (Huselid, 1995), high innovative HR systems (Ichniowski, Shaw, &
Prennushi, 1997), high-involvement HR systems (Batt, 2002), high-commitment
CONTACT Andrea Kim akim@skku.edu

© 2016 Informa UK Limited, trading as Taylor & Francis Group
2 A. Kim et al.
HR systems (Arthur, 1994), and high-investment HR systems (Koch & Mcgrath,

1996). These studies also indicated that such diverse HR systems are positively
related to various aspects (e.g. retention, productivity, financial returns) of organ-
izational performance (Jackson, Schuler, & Jiang, 2014). In a more recent stream,
researchers (e.g. Jiang, Lepak, Hu, & Baer, 2012b) have studied the mechanisms
through which subsets of HR systems influence organizational outcomes. As a
result, macro level studies have improved our understanding of the intermediate
and distal outcomes of the use of HR systems at the organization level.
Despite meaningful progress, the extant literature still includes some under-
developed areas. One is the internal fit perspective, which pertains to how HR
practices within a system relate to each other in terms of the desired system
outcome. As Jiang et al. (2012a) noted, individual HR practices are not isolated,
but rather work in concert, with employees exposed simultaneously to multiple
practices. Consequently, it is important to clarify the internal relationships among
various HR practices comprising an HR system. For some of the patterns, Delery
(1998) earlier conceptualized additive as well as interactive relationships. Later,
Chadwick (2010) suggested two forms of positive interaction among constituent
HR practices, such as virtuous overlaps (i.e. the components’ decomposable effects
are minor, but their interactive effects are crucial) and efficient complementarities
(i.e. the components have both direct and interactive effects). Also, Jiang and
colleagues (2012a) distinguished HR policy domains (i.e. goals that specific sets
of HR practices are supposed to achieve in relation to employee performance)
and then asserted additive relationships among HR practices within the same
domain and interactive relationships between those in different domains. These
conceptual studies have proposed elaborate theoretical frameworks that illumi-
nate interactive relationships among the components of HR systems beyond their
additive relationships. However, while predominantly creating an additive index of
HR practices, little has been done to substantiate interaction among HR practices
(Jiang et al., 2012b).
Another area that needs further development is the contextual understanding of
the effectiveness of HR systems (Janssens & Steyaert, 2009; Paauwe, 2009). Taking
into account the contextual differences that may alter the performance-enhanc-
ing effects of HR systems, multinational companies have been developing HR
systems to fit local contexts (Brewster & Mayrhofer, 2013). However, previous
studies have mostly examined the domestic operations of HR systems in Western
settings (Jackson et al., 2014). To fully understand how the effects of HR systems
vary across diverse contexts in a global economy, research is thus required with
regard to the role of national culture as a form of contextual difference (Gerhart,
2009). Furthermore, research needs to focus on particular sets of HR practices
embedded in specific organizational contexts (Janssens & Steyaert, 2009) rather
than universal sets typically examined in previous research.
This research aims to fill the aforementioned gaps by examining not only addi-
tive relationships, but also interaction among the HR practices that constitute
The International Journal of Human Resource Management 3
participatory work systems used in the South Korean manufacturing industry.

Following efficient complementarities (Chadwick, 2010) and additive/synergetic
relationships of HR practices (Jiang et al., 2012a), we propose both direct additive
effects and positive interactive effects of HR practices. To test those relationships,
we analyze a multi-source data-set collected from 333 large South Korean man-
ufacturing firms. We focus on participatory management practices for two rea-
sons. First, theoretically, participatory management practices can be grouped into
equity and involvement domains according to the perspectives of economic (e.g.
Milgrom & Roberts, 1992) and psychological ownership (e.g. Pierce, Rubenfeld,
& Morgan, 1991). Hence, considering participatory management practices leads
us to theoretically derive two HR policy domains including equity and involve-
ment from ownership perspectives and to thereby test the interaction between
equity-oriented and involvement-oriented HR practices in the South Korean
manufacturing context. Second, from a contextual perspective, participatory
management practices have been widely used in manufacturing organizations
(Godard & Delaney, 2000; Lawler, 1986). Furthermore, scholars have stressed
participatory management practices as the key component of HR systems effective
for manufacturing firm performance (Boxwell & Macky, 2007; Powell, 1995). The
data-set used in this research offers information about the most common forms
of participatory management practices considered in the existing research and
utilized in large South Korean manufacturing firms.
The principal contributions of our research are twofold. First, in the macro HR
management literature, our work helps to improve the understanding of internal
operation of a bundle of participatory management practices. From the point
of view of macro HR management, an HR system is not a simple aggregation
of HR practices, but a planned set of interconnected HR practices intended
to achieve an organizational goal (Huselid, 1995; Wright & McMahan, 1992).
Given that positive interaction within a bundle of HR practices has long been
theorized in the existing literature (Chadwick, 2010; Delery, 1998; Huselid, 1995;
Jiang et al., 2012a), empirically exploring interplay between the constituent
practices of participatory management would contribute to our understanding
of how each component of an HR system promotes organizational effectiveness
(Kepes & Delery, 2007; Lepak, Liao, Chung, & Harden, 2006). Our findings on
the organizational practices related to financial performance are also useful for
practitioners, the major interests of whom include how to manage employees in
order to improve firm profitability (Huselid, 1995; Wall & Wood, 2005).
Second, our findings from the South Korean manufacturing context comple-
ment the international HR management literature, in which the dearth of empiri-
cal knowledge on the effectiveness of HR systems in the Eastern context has been
well documented (Jackson et al., 2014). By analyzing data from South Korean
organizations, which have rarely been examined in prior work, this research adds
evidence regarding how participatory management practices support the financial
success of organizations in South Korea. This evidence is comparable to existing
4 A. Kim et al.
empirical knowledge obtained from Western samples (e.g. Magnan & St-Onge,
2005; Peterson & Luthans, 2006) and can be extended to other countries (e.g.
China, Japan and Taiwan) within East Asia. In particular, given that South Korean
organizations are commonly imbued with hierarchical values, inquiries into how
formal participatory management practices relate to the financial performance of
South Korean organizations, where participation and involvement are suppressed
among lower status employees within organizations, are particularly relevant (Bae,
Chen, Wan, Lawler, & Walumbwa, 2003). Overall, our investigation contributes
to an improved understanding of the operation of HR practices instrumental
under one context (e.g. country, industry) in another context. Combined with
existing evidence from countries with Western cultural values (e.g. lower power
distance orientation), the results of this study also help to explore cross-cultural
differences in the effectiveness of participatory management practices, which will
provide practical implications for more effectively managing a diverse workforce
by adopting appropriate HR practices.
In what follows, we explain Chadwick’s (2010) and Jiang et al.’s (2012a)
theoretical claims on additive and interactive relationships of HR practices. Next,
we draw on economic (Milgrom & Roberts, 1992) and psychological (Pierce
et al., 1991) ownership perspectives to capture equity and involvement as two
domains of employee participation. These theoretically grounded domains allow
us to suggest intra-domain additive effects and inter-domain interactive effects
of diverse participatory management practices. Finally, we test our theoretical
model with a data-set from the South Korean manufacturing industry and discuss
our findings and their implications within the existing literatures on macro and
international HR management.
An internal fit perspective

As a central tenet in the field of macro HR management (Lepak & Shaw, 2008),
internal fit refers to congruence among the HR practices that constitute an HR
system (Baird & Meshoulam, 1988). The gist of macro HR management research
is the HR system perspective, asserting that HR practices should not function
separately, but rather be aligned together to help an organization achieve its
goals. Thus, the impact of an HR system on organizational outcomes needs to be
examined with regard to the combined effects or internal relationships of diverse
components.
The notion of internal fit is underpinned by two theoretical perspectives. First,
building on a contingency perspective, it is grounded in the assumption that the
effectiveness of a certain HR practice depends on other HR practices in the HR sys-
tem (Delery, 1998; Ichniowski et al., 1997; Macduffie, 1995). Given that employees
tend to simultaneously experience a host of various HR practices in the workplace
(Takeuchi, Lepak, Wang, & Takeuchi, 2007), scholarly attention has been directed
to the relationship patterns among multiple HR practices. Second, as Bowen and
Ostroff (2004) noted, HR practices serve as a signaling function, transmitting the

messages that guide employees to understand their work environment. According
to this signaling perspective, the incorporation of internally aligned practices into
an HR system contributes to organizational effectiveness (Delery & Doty, 1996),
because distinct and consistent signals will elicit appropriate and valuable attitudes
and behaviors from employees (Becker & Huselid, 1998).
While recent research in the field of macro HR management has called for
studies on the mediation process through which employees’ perceived HR prac-
tices affect organizational outcomes, another stream focusing on HR practices
intended by organizations has elaborated on the internal fit perspective in order
to provide managerial implications on the effective use of diverse HR practices in
relation to organizational performance. In the latter stream, taking into account
the specialization of, and interactions among, components of an HR system in
relation to its desired outcome, Chadwick (2010) proposed two forms of positive
interaction. One is virtuous overlaps, where the components’ decomposable effects
are minor but their interactive effects are crucial to the desired system outcome.
The other is efficient complementarities, where the components have both direct
and interactive effects on the intended outcome.
In addition, using the concept of HR policy domain, which refers to a goal that
comprises a particular set of HR practices (Lepak et al., 2006), Jiang and colleagues
(2012a) suggested different relationship patterns of HR practices within the same
domain and between different domains. According to their conceptual framework,
additive relationships among HR practices manifest when various HR practices
pursue a common goal within the same domain. In an additive relationship, the
total effects of using two HR practices on a desired system outcome are deemed
to be greater than the effect of using either practice alone, but not greater than the
sum of the total effects (Jiang et al., 2012a). For example, selection and training
both improve the organizational pool of human capital, but in independent ways:
the former contributes to initial acquisition, and the latter contributes to further
development (Delery, 1998). On the other hand, positive interactive effects are
generated among HR practices within separate yet interdependent domains of
HR policy (Jiang et al., 2012a). This claim regarding positive interaction is similar
to the efficient complementarities approach of Chadwick, proposing that interac-
tive effects among HR practices occur when HR practices are highly specialized
and highly interactive. As an example, incentives and training are specialized
for motivation and human capital, respectively. Both practices interact with one
another for employee performance, which requires employees to have human
capital and exert effort (Wright & Snell, 1998), because only motivated employees
who have necessary skills and abilities are able to achieve their job performance.
Our empirical investigation draws on the advanced notions of this internal fit
perspective to identify additive and interactive relationships among participatory
management practices in firms.
6 A. Kim et al.
Equity and involvement as two domains of participatory management

practices
Clarifying the components of an HR system is a prerequisite to examining the
internal operation of an HR system. To this end, our empirical investigation
focuses on participatory management practices, because they are theoretically
classified into two HR policy domains. According to economic and psycholog-
ical ownership perspectives, participatory management practices are divided
into equity and involvement, serving as specialized domains where HR practices
operate by way of this common goal (Jiang et al., 2012a). A group of economists
(Ben-Ner & Jones, 1995; Milgrom & Roberts, 1992) have identified a return right
and a control right as two components of economic ownership. Similarly, some
psychologists (Pierce, Kostova, & Dirks, 2001; Pierce et al., 1991) have suggested
that formal ownership is a multidimensional concept consisting of equity, influ-
ence, and information. Equity-oriented practices are intended to fulfill residual
returns or equity in a manner through which employers share excess earnings
with employees. Involvement-oriented practices aim to meet residual control or
the need for influence and information (Jackson, 1983), because these practices
facilitate communication, information sharing, and codetermination between
employers and employees. As such, equity and involvement are two criteria that
can be used to sort participative management practices.
In the equity domain, the prevailing forms of participatory management
practices are profit sharing and gainsharing (Cooke, 1994; Jones, Kalmi, Kato,
& Mäkinen, 2012; Kim, 2005; Park, Appelbaum, & Kruse, 2010). Profit sharing
is an organizational incentive plan for organizational profitability. Gainsharing
is an organizational incentive plan based on productivity improvement or cost
reductions in a work group or an overall organization. These company-wide, cash-
based incentive schemes illuminate the direct causal linkage between employee
effort and firm profitability (Robinson & Wilson, 2006).
In the involvement domain, employee participation represents the collection
of organizational practices that allow employees to be involved in managerial
decision-making processes (Glew, O’Leary-Kelly, Griffin, & VanFleet, 1995). These
participative work programs encourage employees to be involved in production
decisions intended to address inefficiency and other specific problems (Cooke,
1994), by which these practices are instrumental in enhancing a firm’s pool of
human capital. The most common forms are job rotation, on-the-job training,
quality circle, total quality management, and six-sigma. Job rotation refers to ‘lat-
eral transfers of employees between jobs in an organization’ (Campion, Cheraskin,
& Stevens, 1994, p. 1518), which allows employees to be involved in diverse jobs.
Accordingly, job rotation has been shown to improve the perceived human capital
of employees (Campion et al., 1994), as well as the overall organizational capa-
bilities of acquiring, assimilating, and transforming knowledge (Jansen, Van Den
Bosch, & Volberda, 2005). On-the-job training refers to the practice of learning
by observing among employees, together with performing various job-related
behaviors of colleagues and managers. On-the-job training is widely recognized

as a low-cost and effective involvement practice for employee mastery of job-re-
lated skills and technology (Noe, Hollenbeck, Gerhart, & Wright, 2013; Pischke,
2001). The quality circle practice generally represents a small volunteer group
of employees who are involved in identifying, analyzing, and solving quality-re-
lated issues on a regular basis (Munchus, 1983). Total quality management refers
to a firm-wide set of practices intended to ensure that the quality of products
and services meets the highest possible standards (Jablonski, 1991). Total qual-
ity management requires collaboration among diverse functions, together with
problem-solving for understanding and meeting customer needs (Dean & Snell,
1991). Finally, six-sigma is defined as ‘an organized and systematic method for
strategic process improvement and new product and service development that
relies on statistical methods and the scientific method to make dramatic reduc-
tions in customer defined defect rates’ (Linderman, Schroeder, Zaheer, & Choo,
2006, p. 195). Six-sigma is a well-known cause of profound benefits gained by
many high-profile firms (Pande, Neuman, & Cavangh, 2000). As its core com-
ponent, six-sigma compels employees to be involved in improving methods and
tools (Hoerl, 2001). By providing employees with ample opportunities to learn by
doing (Hatch & Dyer, 2004) and for knowledge sharing (Collins & Smith, 2006),
these participatory practices play a significant role in broadening and deepening
employee knowledge, skills, abilities, and work experience.
With the distinction of domains, this research attempts to empirically explore
how these participatory management practices relate to one another within a
single domain, as well as across domains, in order to positively influence the
profitability of manufacturing firms.
The additive effects of components within the same HR policy domain

on organizational performance
Following the argument of Jiang and colleagues (2012a) for intra-domain additive
relationships, we suggest that participatory management practices within the same
domain may exert an additive effect on financial performance. This idea builds on
the assumption that organizational practices within the same domain are independ-
ent and have their own effects on organizational performance (Chadwick, 2010).
In the case of financial participation practices, the goal is to motivate employees
through equity. The opportunity for employees to participate in financial returns
produces a positive-sum game. These practices link rewards for employees to
the organizational bottom line. For example, profit sharing distributes a certain
portion of the profits to employees (Kruse, 1993), and gainsharing divides any
saved labor costs or productivity gains among employees (Welbourne & Gomez-
Mejia, 1995). Accordingly, the interests of employees are aligned with the inter-
ests of employers under financial participation practices (Bartol & Locke, 2000;
Eisenhardt, 1989; Kato & Morishima, 2002). The monetary benefits from financial
participation practices depend on organizational performance and increase when
8 A. Kim et al.
organizations achieve higher levels of performance. Given that financial returns

are positively correlated (Deutsch, 1949) and interdependent (Wageman & Baker,
1997) among organizational members, financial participation practices that value
and reward employee contributions to organizational performance are likely to
influence the motivation and efforts of employees, which in turn elicit employee
attitudes and behaviors that promote organizational performance (Schuler &
Jackson, 1987). As noted above, each financial participation practice is based on
a specific facet (e.g. profits, efficiency) of organizational performance. Thus, the
use of multiple financial participation practices may better optimize the distal
financial performance of organizations.
Organizational practices in the involvement domain can also affect financial
performance. According to human capital theory, organizational performance
hinges on human capital (i.e. employee skills, knowledge, and abilities), and profits
are generated when the returns surpass the costs of investment in human capital
(Becker, 1964; Ployhart & Moliterno, 2011). An organizational pool of human
capital results from organizational practices that develop and utilize employees
(Koch & Mcgrath, 1996; Snell & Dean, 1992). Employee involvement practices
function to empower employees, to facilitate their participation in decision-mak-
ing, and to encourage information sharing (Cotton, 1993; Lawler, 1986). Under
these practices, employees have the opportunity to utilize their human capital
(Kato & Morishima, 2002) for the sake of improving organizational performance.
In addition, these practices enable employees to better understand the formal and
informal expectations of their roles through increased communication with oth-
ers (Jackson, 1983), as well as to enhance the knowledge and skills of employees
through knowledge sharing and organizational learning (Arthur & Aiman-Smith,
2001). For instance, quality circle and total quality management practices promote
interaction and information sharing among employees at the group level and at
the firm level, respectively. Thus, the use of multiple organizational practices in
the involvement domain enables employees to interact with one another. Such
enhanced interaction augments the organizational pool of human capital (Jackson
& Schuler, 1995), which ultimately improves the organizational bottom line.
Despite many organizations adopting multiple forms of participatory manage-
ment practices, prior research has mostly focused on a single or a few practices
(Kruse, Freeman, & Blasi, 2010). This research contributes to the literature on
employee involvement and participation by considering multiple practices in both
equity and involvement domains and providing empirical evidence to determine
whether the use of multiple practices in both domains is positively related to
financial performance.
Hypothesis 1: An additive index of organizational practices in the equity domain is
positively related to financial performance.
Hypothesis 2: An additive index of organizational practices in the involvement domain

is positively related to financial performance.
Equity domain
Profit sharing H1
Gainsharing
H3 Return on equity
Involvement domain
Job rotation
On-the-job training
Quality circle H2
Total quality management
Six sigma
Figure 1. A theoretical model.
The interactive effects of components in different HR policy domains on

organizational performance
As Jiang and colleagues (2012a) conceptually proposed, positive interactive effects
can be generated among HR practices within separate yet interdependent domains
of HR management. According to Chadwick’s (2010) theoretical framework, there
are efficient complementarities among HR practices that are both highly special-
ized and highly interactive. In this reciprocal interdependence view developed by
Chadwick, organizational practices may be aligned with other practices to capture
complementary effects, such that organizational practices moderate the linkage
between an organization’s other practices and its performance.
We suggest that the interactive effects between equity-oriented practices and
involvement-oriented practices may be positively related to financial performance.
Participatory management practices are specialized for different foci, such as equity
and involvement, but ‘reciprocal interdependence’ may exist between the two
bundles of organizational practices. First, researchers have asserted that employee
involvement practices are crucial for the effectiveness of financial participation
programs (Pendleton & Robinson, 2010; Welbourne & Gomez-Mejia, 1995). As
Weitzman and Kruse (1990) noted, group-based incentives tend to produce bet-
ter organizational effectiveness when the free-rider problem is addressed. The
free-rider problem is mitigated by observability (Freeman, Kruse, & Blasi, 2010).
Thus, employee involvement practices may create working environments where
the free-rider problem is less likely to exist, because these practices activate peer
pressure and horizontal monitoring (Robinson & Wilson, 2006). In other words,
under employee involvement practices that center on employee perspectives (Kim,
2005), employees have greater opportunities to notice work effort, behavior, and
contributions of their colleagues. In addition, by enhancing human capital through
the codetermination and problem-solving processes that comprise employee
involvement practices, employees are better able to monitor and detect free rid-
ers in the workplace. On the other hand, financial participation practices may be
10 A. Kim et al.
fundamental to enhancing the effectiveness of employee involvement practices,

which depend on employee cooperation, because financial participation practices
provide employees with material motives to collaborate with others (Kruse, 1993;
Welbourne & Gomez-Mejia, 1995). For example, under total quality management,
group-based incentives can facilitate information and knowledge sharing among
employees (Youndt, Snell, Dean, & Lepak, 1996). Collaboration motives heighten
the collective contribution of employees under employee involvement practices,
thereby increasing monetary benefits from financial participation practices. Taken
as a whole, participatory management practices in the equity domain and those in
the involvement domain may be reciprocally interdependent, maximizing finan-
cial performance.
Hypothesis 3: An additive index of equity-oriented practices and an additive index of
involvement-oriented practices positively interact with each other in relation to finan-
cial performance, such that the positive linkage between an index of HR practices and
performance is stronger when an index of the other HR practices is higher.
Our theoretical model and proposed relationships between study variables are
summarized in Figure 1.
Method
The South Korean manufacturing context
Organizations in the manufacturing industry have been a popular research context
in previous macro HR research (e.g. Arthur, 1994; Datta, Guthrie, & Wright, 2005;
Hatch & Dyer, 2004; Macduffie, 1995; Snell & Dean, 1992; Youndt et al., 1996). In
fact, the meta-analysis of Combs, Liu, Hall, and Ketchen (2006) indicated that HR
systems have more significant performance-increasing effects for manufacturing
organizations than for service organizations due to the nature of the manufactur-
ing working structure, in which (1) capital intensity requires employee adaptiv-
ity, (2) organizational inducements are important for developing and motivating
employees, (3) employees have the most responsibility for product quality (cf.
co-production through the interaction between employees and customers in the
service sector), and (4) tasks are highly interdependent. As such, consideration
of the South Korean manufacturing industry is worthwhile in terms of enriching
the macro HR literature by providing findings from an Eastern manufacturing
context to complement the existing evidence from Western settings, as well as pro-
viding theoretical and practical implications for how HR practices work together
to promote manufacturing organization performance, which hinges on employee
skills and motivation.
Due to unique socioeconomic factors, South Korea is a representative and
intriguing setting for studying how participatory management practices operate
in an Asian context. South Korea is a developed country (it is listed 13th on the
list of 2014 nominal GDP by the International Monetary Fund) in the global
economy and is among the top four (i.e. China, Japan and Taiwan) in Asia. The
manufacturing industry has served as a major growth driver of the South Korean
economy. Since the 1980s, about 40% of the country’s GDP has been produced
by the manufacturing sectors including electronics, automobiles, shipbuilding,
steel and textiles.1 The rapid economic growth history of South Korea through
enormous conglomerates – Chaebols in South Korea (Steers, Shin, & Ungson,
1989) – such as Samsung, LG, Hyundai, and SK, is well known, with some affiliated
companies ranked highly in the Fortune 500 list. Although large corporations
emerged due to the strong government support, they have been rapidly developed
by authoritative and bureaucratic managerial styles emanating from the South
Korean traditional culture (Steers et al., 1989). Vertical collective work relation-
ships (Yang, 2014) and formal hierarchies (Dastmalchian, Lee, & Ng, 2000) are
salient in South Korean organizations. As Hofstede (1991) noted, South Korea has
a higher power distance orientation value, which is defined as the extent to which
an individual accepts that power in organizations is unequally distributed (i.e.
centered on the high-status individuals). Hence, South Korean organizations are
characterized by a centralized and hierarchical culture, where employees generally
adhere to managerial control and follow the decisions of superiors (Lee, 1998).
There have been continuous efforts to improve employment relations in South
Korea. In 1997, employment law was changed to facilitate employee participation
in two dimensions: (1) worker representative participation in managerial deci-
sion makings (i.e. a labor-management council system), and (2) worker financial
participation via employee ownership programs and other incentives of sharing
company profits. Despite legislative effort, the labor-management council system
has not been effective as a method of increasing employee participation. Rather,
Kato, Lee, Lee, and Ryu (2005) found that this system functions better when a
company has employee involvement practices or unions.
Given the strong hierarchical organizational culture that deters lower level
employees from being involved in organizational decision-makings (Bae et al.,
2003) and the limited role of employment law in South Korea (Kato et al., 2005),
investigation of the role of participatory management practices utilized exten-
sively by South Korean manufacturing organizations and determination of their
difference from the Western context are warranted.
Sample and procedure
We used the Human Capital Corporate Panel (HCCP) 2009 data-set collected by
the Korea Research Institute for Vocational Education and Training (KRIVET:
eng.krivet.re.kr), which was established in 1997 with support from the South
Korean Government. In order to investigate HR management and development
in South Korean firms and supporting government policies for labor and educa-
tion, KRIVET has been conducting biennial nationwide surveys since 2005. The
sampling frame of the HCCP 2009 was 500 publicly held firms, determined by a
12 A. Kim et al.
stratified random sampling method in consideration of the type of industry (i.e.

manufacturing, financial service, and non-financial service), firm size (i.e. more
than 100 employees), and maintenance panels. In terms of industry type and firm
size, the sample was drawn to match the population distribution, with 4109 firms
in the corporate database of the Korea Information Service (KIS). The KIS ‘is a
leading credit rating agency in Korea, equivalent to Standard & Poor’s or Moody’s
in the United States’ (Chang & Hong, 2002, p. 266). From June to December 2009,
473 firms participated in the HCCP 2009 survey, resulting in a response rate of
94.6%. Of the total sample, we analyzed data from 333 manufacturing firms,
because the data of most involvement-oriented practices were relevant to, and
responded by, only manufacturing firms.
The surveys were completed via on-site interviews with multiple respondents
per functional area (see Kim & Ployhart, 2014). This study analyzed the retrospec-
tive responses of (1) strategic planning managers regarding the main business of
their firms, (2) HR development managers regarding their organizational practices
in the involvement domain, and (3) HR management managers regarding their
organizational practices in the equity domain, unionization, and firm size. In
the South Korean business community, HR development managers specialize in
developing workforce competencies, whereas HR management managers gener-
ally lead other areas such as HR planning, recruiting, selection, compensation, and
performance appraisal. Return on equity (ROE) data and financial information
for control variables were provided by the KIS, which has a database of corporate
profiles and financial information equivalent to that of Compustat in the U.S.
(Chang & Hong, 2002).
Measures
Equity-oriented practices
Based on the survey utilized for analysis, an index of equity-oriented practices
was created from the responses to two questions regarding whether firms formally
adopted (1) profit sharing and (2) gainsharing. The survey defined profit sharing
as a practice in which shares of firm profits are distributed to employees when
the firm profits exceed expectations. The survey defined gainsharing as a practice
in which shares of the earnings of production lines or plants are distributed to
line workers when their production lines or plants attain targeted productivity
gains and/or cost reductions. These definitions are consistent with the concepts in
Western management literature. The responses to the two questions were coded
1 if each practice was adopted and 0 otherwise. Therefore, the value of the equi-
ty-oriented practices index ranged from 0 (neither profit sharing nor gainsharing
in use) to 2 (both profit sharing and gainsharing in use). An internal consistency
estimate was not relevant to these dummy-coded indexes of equity-enhancing
practices (Liao & Chuang, 2004).
Involvement-oriented practices
The intensity of use by firms for each of the five involvement-oriented organi-
zational practices was measured on a five-point scale (with scores ranging from
1 = not at all to 5 = very intensively) [item factor loadings are given in parentheses
after each item] (α = .72): (1) job rotation [.64], (2) on-the-job training [.65], (3)
quality circle [.71], (4) total quality management [.81], and (5) six-sigma [.60].
A sample item is ‘How much has your organization invested in using job rota-
tion?’ Principal components analysis with Varimax rotation indicated that each
of the five items was loaded onto a single factor (with an eigenvalue of 2.36) and
accounted for 47.12% of the variance.2 Consistent with prior research in the field
of macro HR management (e.g. Macduffie, 1995), we used an additive index of
involvement-oriented practices in subsequent analyses.
Financial performance
In order to report compelling and comparable evidence, this study focuses on
ROE. Because ROE is generally acknowledged to be a useful indicator of a firm’s
profitability, it is widely used in management literature (Richard, Devinney, Yip, &
Johnson, 2009), even though the accounting measures tend to vary substantially
across industries (Fulmer, Gerhart, & Scott, 2003; Loughran & Ritter, 1997). We
considered 2009 year-end ROE, which was calculated by dividing a firm’s net profit
by its annual average equity. The ROE metric reveals the profit a firm generates
with the money invested by shareholders.
Control variables
In line with prior research (Datta et al., 2005; Freeman & Medoff, 1984; Huselid,
1995; Koch & Mcgrath, 1996; Youndt et al., 1996), main businesses, unioniza-
tion, firm size, assets, and equity were used as control variables in order to pro-
vide unbiased estimates of the impact of participatory management practices
on organizational financial performance. Main businesses included 13 dummy
variables representing subcategories in the manufacturing industry. Unionization
was measured by the percentage of union members. Firm size was measured as
the natural logarithm of the total number of employees. We used the natural
logarithms of assets and equity as of 2009.
Results
Statistical software SPSS 15.0 was used to determine correlations among the study
variables and for regression analyses to test the hypotheses. ROE was moderately
correlated with equity-oriented practices (r = .13, p < .05) and involvement-ori-
ented practices (r = .22, p < .001). Equity-oriented and involvement-oriented
practices also had a modest positive correlation (r = .18, p < .01). The average
employment size of the sample firms was 833.57. On average, 65.54% of their
employees were union members. Their average ROE was 5.75 (see Table 1).
14
Table 1. Descriptive statistics and correlations.a

Variables M s.d. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
1. Main business 1b .09 .28
2. Main business 2 .06 .24 −.08
3. Main business 3 .01 .11 −.03 −.03
4. Main business 4 .03 .16 −.05 −.04 −.02
5. Main business 5 .12 .33 −.11 −.09 −.04 −.06
A. Kim et al.
6. Main business 6 .03 .18 −.06 −.05 −.02 −.03 −.07

7. Main business 7 .04 .19 −.06 −.05 −.02 −.03 −.07 −.04
8. Main business 8 .13 .34 −.12 −.10 −.04 −.07 −.14 −.07 −.08
9. Main business 9 .19 .39 −.15 −.12 −.05 −.08 −.18 −.09 −.09 −.19
10. Main business 10 .02 .14 −.05 −.04 −.02 −.02 −.05 −.03 −.03 −.06 −.07
11. Main business 11 .14 .35 −.13 −.10 −.05 −.07 −.15 −.08 −.08 −.16 −.20 −.06
12. Main business 12 .13 .34 −.12 −.10 −.04 −.06 −.14 −.07 −.07 −.15 −.18 −.06 −.16
13. Main business 13 .01 .11 −.03 −.03 −.01 −.02 −.04 −.02 −.02 −.04 −.05 −.02 −.05 −.04
14. Unionization 65.64 28.61 .01 −.01 −.01 −.07 .13 −.04 .04 .03 −.11 −.03 −.09 .09 .09
15. Firm sizec 833.57 2078.43 .18 −.08 .00 −.06 −.02 .10 −.03 .06 −.14 −.02 −.06 .11 −.08 .13
16. Assetsc 726 2703 .07 −.05 −.01 −.02 .03 .03 −.02 .20 −.21 −.03 −.08 .10 −.04 .14 .80
17. Equityc 349 1662 .07 −.05 −.01 −.05 .04 .06 .00 .18 −.18 −.03 −.07 .05 −.02 .13 .74 .92
18. Equity-oriented .22 .48 −.01 .01 .01 −.04 .06 −.05 .01 −.05 .08 .06 .02 −.12 .01 .01 .01 −.03 .02
practices
19. Involvement- 2.68 1.01 .08 −.12 .02 −.13 −.01 −.08 −.01 .05 −.04 .01 .02 .14 −.11 .18 .39 .36 .36 .18
oriented practices
20. ROE 5.75 25.72 .08 −.12 −.01 −.05 .09 .01 −.02 −.04 −.03 .01 .04 .00 −.04 −.04 .09 .09 .17 .13 .22
Note: Numbers 1–19 in the top row correspond to variables in the respective sections of the table.
a
N = 333. For all correlations with an absolute value higher than .09, p < .10; for all correlations with an absolute value higher than .11, p < .05; for all correlations with an absolute value higher than
.14, p < .01; for all correlations with an absolute value higher than .19, p < .001.
b
Main business: food/beverage (1), fiber/garment (2), lumber/furniture (3), paper/printing (4), oil/gas (5), medical substances/medicine (6), minerals (7), metals (8), electronics (9), precision machin-
ery (10), electrics/machinery (11), auto/transporter (12), and other (13).
c
Natural logarithms of the variables were used in subsequent analyses; assets and equity were reported in 1000 USD as of the end of 2009.
Ordinary least squares regression analysis was performed to test the additive
effects of organizational practices in the equity domain (Hypothesis 1) and in the
involvement domain (Hypothesis 2) on organizational financial performance.
The results indicated that an additive index of equity-oriented practices has a
marginally significant positive relationship with ROE (β = .10, p < .1 in Model 2),
whereas an additive index of involvement-oriented practices has a significant
positive relationship with ROE (β = .20, p < .01 in Model 3). Therefore, Hypothesis
1 was rejected, but Hypothesis 2 was supported.
To test the interactive effects between equity-oriented and involvement-ori-
ented practices on organizational financial performance (Hypothesis 3), we con-
ducted a moderated hierarchical regression analysis, in which we entered the
control variables in Step 1, the bundle of equity-oriented practices, and the bundle
of involvement-oriented practices in Step 2, and the interaction term in Step 3. In
constructing the interaction term, we adopted the procedure of mean centering
suggested by Aiken and West (1991). This procedure is useful in addressing poten-
tial problems of multicollinearity, which result from high correlations between the
interaction term and its constituent variables (Datta et al., 2005). Following the
procedure of mean centering, we subtracted the mean of each constituent variable
of the interaction term from observed values and subsequently constructed the
interaction term. The results demonstrated that the interaction term between
a set of equity-oriented practices and a set of involvement-oriented practices
has a significant positive relationship with ROE (β = .12, p < .05 in Model 5).
Consequently, Hypothesis 3 was supported (see Table 2).
Table 2. Results of regression analyses on ROE.

Additive effects Interactive effect
Variables Model 1 Model 2 Model 3 Model 4 Model 5
Main businesses (controlled) (controlled) (controlled) (controlled) (controlled)
Unionization −.07 −.09 −.07 −.09 −.09†
Firm size .01 −.04 −.00 −.04 −.04
Assets −.45** −.44** −.41** −.42** −.48**
Equity .58*** .55*** .55*** .53*** .58***
Equity-oriented .10† .07 .02
practices
Involvement-ori- .20** .18** .20**
ented practices
Equity-oriented .12*
practices ×
involvement-ori-
ented practices
F 2.10** 2.20** 2.65*** 2.72*** 2.60***
R2 .10 .11 .13 .14 .13
∆R2 .01 .03 .04 .03
F for ∆R2 3.53† 10.56** 4.23* 6.12**
Notes: Standardized coefficients are reported; N = 333.
†p < .10 *p < .05; **p < .01; ***p < .001.
16 A. Kim et al.
Figure 2. An interaction plot.
We employed an interaction plot to show how the effects of HR practices in

one domain on ROE depend on the effects of HR practices in another domain.
As shown in Figure 2, the interaction plot displays high and low levels of involve-
ment-oriented practices on the x-axis and two separate lines of high and low
equity-oriented practices. It reveals that ROE is maximized when both involve-
ment-oriented and equity-oriented practices are extensively implemented. The
results confirmed the positive interaction between both sets of participatory
management practices in relation to ROE. Hence, Hypothesis 3 was supported.
Discussion
The primary goal of this research was to test additive as well as interactive rela-
tionships among participatory management practices in relation to the profita-
bility of organizations. We analyzed a multi-source data-set of 333 South Korean
large manufacturing organizations. The results revealed that involvement-oriented
practices not only have additive associations with one another, but also positively
interact with equity-oriented practices in relation to the ROE of South Korean
manufacturing firms.
Theoretical implications
The results of this research contribute to an improved understanding of how

organizational practices relate to one another in terms of organizational per-
formance. Existing macro HR management literature has suggested various
patterns of relationships among HR practices, while a few studies have empir-

ically investigated interactive effects among HR practices (Gerhart, 2007). For
example, Huselid (1995) analyzed a large-scale multi-industry data-set and found
that the positive interaction between skill-enhancing and motivation-enhancing
HR practices is related to financial performance. Using a multicultural data-set
of automobile manufacturing plants, Macduffie (1995) found that the positive
interaction among a set of production practices, a set of involvement-oriented HR
practices, and a set of other HR practices (e.g. training, variable pay) is related to
labor productivity. Later, Kepes and colleagues (2008) focused on the interaction
between individual HR practices rather than bundles of HR practices and indi-
cated that participative decision-making positively interacts with selective staffing
and performance-based pay in terms of organizational performance. In existing
employee involvement and participation literature, empirical results on the inter-
action between employee involvement and financial participation practices have
been inconsistent, to the extent that some studies found no interaction effects (e.g.
Cooke, 1994; Robinson & Wilson, 2006), whereas others found significant inter-
action effects (e.g. Kato & Morishima, 2002; Pendleton & Robinson, 2010). Our
results complement existing research on the interaction of organizational prac-
tices in three ways. First, our work adds new evidence to the linkage between the
positive interaction of participative management practices and ROE from South
Korean manufacturing firms. Second, integrating diverse theoretical perspectives
(i.e. internal fit, economic ownership, and psychological ownership), we seek to
theoretically justify why organizational practices in the equity and involvement
domains interact to improve organizational financial performance. Third, the
findings of this research are based on the clarified components of participative
work structures, thereby promoting our understanding of interdependent organ-
izational practices and those that create synergy for organizational performance
(Kepes et al., 2008).
The findings of this study support the complementarity perspective, which
posits that an organizational competitive advantage can be created and sustained
from beneficial interplay among organizational factors (Adegbesan, 2009). We
observed such beneficial interplay between involvement-oriented and equity-ori-
ented practices on ROE of the sample manufacturing firms. The finding that a
discrete set of involvement-oriented practices is positively related to ROE makes
sense because these types of practices immediately enhance the knowledge, skills,
abilities, and experience of employees (Hitt, Bierman, Shimizu, & Kochhar, 2001).
As human capital is enhanced at the organization level, manufacturing costs can
be reduced (Hatch & Dyer, 2004). However, even though human capital per se
has economic value, its contribution to organizational effectiveness can be fully
realized only via desirable behaviors such as knowledge sharing and collabora-
tion among employees (Collins & Smith, 2006; Jackson & Schuler, 1995). Profit
sharing and gainsharing, which this research regards as equity-oriented prac-
tices, have been shown to effectively facilitate the interactive, interdependent,
18 A. Kim et al.
and cooperative behaviors required to strengthen employee knowledge, skills,

abilities, and working experience (e.g. Ichniowski & Shaw, 2003; Welbourne &
Gomez-Mejia, 1995; Youndt et al., 1996). Our findings on the positive comple-
mentarity between involvement-oriented and equity-oriented practices in relation
to financial performance facilitate an understanding of ‘the nature of the elements
that form complementary relationships or the conditions for their emergence’
(Ennen & Richter, 2010, p. 207).
It is interesting to note that a set of involvement-oriented practices does have
a significant positive relationship with ROE, but a set of equity-oriented practices
does not. This finding can be interpreted in two ways. From a theoretical perspec-
tive, this finding is consistent with field theory (Lewin, 1943), which predicts that
more proximal elements in a social environment have a greater influence on the
perceptions of individuals (Bishop, Scott, & Burroughs, 2000). Financial partici-
pation practices, such as profit sharing and gainsharing, are typically realized for
employees just once a year. Hence, even though these practices align employee
returns with organizational returns, employees may be less likely to perceive their
own instrumentality in the positive outcomes of these financial participation prac-
tices. In contrast, it is more likely that employee involvement practices enable
employees to perceive their influence on organizational performance when they
are involved in decision-making processes and communication. Such variations in
the employee level experience of organizational practices explain theoretically why
involvement-oriented practices outperform equity-oriented practices in relation
to the financial performance of organizations.
From a contextual perspective, this finding may imply that South Korean organ-
izations claim greater financial benefits from involvement-oriented practices than
from equity-oriented practices. Previous research has reported that the use of equi-
ty-oriented practices increases organizational profitability in Canadian (Magnan
& St-Onge, 2005) and US samples (Peterson & Luthans, 2006). In contrast, this
linkage was not significant in our South Korean study. On the other hand, our
finding of the significant linkage between involvement-oriented practices and
organizational profitability is consistent with previous research. For example, a
recent cross-cultural study by Jiang, Colakoglu, Lepak, Blasi, and Kruse (2015)
indicates that the relationship between a set of involvement-oriented practices
and operational effectiveness is significantly positive among organizations in
high power distance cultures and non-significant among organizations in lower
power distance societies. According to Hofstede’s (1991) indices of power distance
scores, South Korea is a higher power distance nation, wherein people believe
that power should be concentrated among higher status people. In the organiza-
tions informed by higher power distance values, decision-making is less devolved
(Gooderham, Morley, Parry, & Stavrou, 2015), and employees tend to follow
the decisions of leaders rather than suggest ideas. This power distance value is
likely to disrupt any positive linkage between employee input and organizational
profitability. Thus, taking into account the power distance value in South Korea,
involvement-oriented practices are more instrumental than equity-based practices

in relation to firm profitability, because involvement-oriented practices ensure
that employees have opportunities to be heard. These results support the need for
managing employees according to cultural contexts (Schuler et al., 2011).
Our findings on the relative efficacy of participative management practices in
a non-Western context are conducive to the international HR management liter-
ature. Given that participative work structures have spread worldwide (Arthur &
Aiman-Smith, 2001; Lawler et al., 2001; Poutsma et al., 2006), researchers have
examined whether participatory management practices positively influence organ-
izational outcomes (Litwin, 2011). However, the literature has been traditionally
underpinned by the cultural values of Western countries (De Cieri et al., 2007). As
multinational companies have been faced with global volatility and have increas-
ingly hired more local talent, researchers in this field have agreed that US-centric
frameworks are incomplete (Cascio & Boudreau, 2016) and thus have called for
research considering important contextual differences (Schuler & Jackson, 2014).
Our work includes findings that varied somewhat from the empirical knowledge
accumulated from the Western settings discussed above. We did not specifically
test cultural fit in the effectiveness of participatory management practices across
multiple countries or cultural values. Instead, we used national culture as a lens
through which to interpret our results. We admit that this is an obvious limita-
tion. Notwithstanding, our investigation has value in that it considered a more
distal outcome of organizational performance using a multi-source data-set, and
focused on a specific set of HR practices imbedded in the manufacturing context.
In particular, by considering both the equity and involvement domains of par-
ticipative management practices, which are widely used in organizations around
the globe, we revealed some results that were comparable to existing findings in
the Western context and interpretable based on cultural values. The mixed results
found in this non-Western research and previous Western research suggest the
need for more scholarly attention to contextual differences, which serve as a driver
of HR management in an international context (Farndale, 2010). We encourage
researchers to conduct cross-cultural studies similar to Jiang and colleague (2015).
However, since they only considered HR practices in the involvement domain,
research investigating the contextual differences in the effectiveness of HR prac-
tices in the equity domain is needed. All of these scholarly endeavors are expected
to broaden our understanding of the effectiveness of participative management
practices in a global context.
Practical implications
Our work offers some managerial implications for the effective utilization of
participatory management practices in the Eastern context or in other strongly
hierarchical workplaces. In our findings from South Korean manufacturing firms,
involvement-oriented practices outperform equity-based practices in relation
20 A. Kim et al.
to firm profitability, because only involvement-oriented practices have a direct

positive relationship with ROE. However, although organizational practices
in the equity domain do not have significant relationships with ROE, positive
relationships between equity-oriented practices and ROE emerge when involve-
ment-oriented practices are implemented together. These findings imply that
organizations with a high power distance orientation may benefit from the use
of managerial practices encouraging employee involvement in decision-making
and problem-solving and that the bottom line of organizations may be improved
by the combinative use of equity-oriented practices. Based on our findings, man-
agers and leaders should prioritize the use of involvement-oriented practices if
the working environment restricts employee voice. Furthermore, along with the
involvement-oriented practices eliciting beneficial participation from employees,
the next step toward better organizational performance may be implementation of
equity-oriented practices motivating employees to collaborate with one another
for their own financial benefit.
Limitations and future research directions
As with most studies, this study is not without limitations. First, the cross-sectional
design of this research prevents us from inferring any causality in the relationships
we found. We encourage future research to replicate our research model with a
longitudinal data-set.
Second, as we analyzed data collected in 2009, there might be concerns about
the relevance of the results to the current South Korean context. We speculate that
our findings are relevant to the present South Korean context because no conspic-
uous cultural changes have been observed over the past several years. For instance,
according to the World Value Survey,3 over the past decade, South Korea has been
consistently located in the Confucian cultural cluster and characterized by rela-
tively high survival (i.e. a greater emphasis on economic and physical security)
and secular-rational (i.e. a reduced emphasis on traditional values) orientations.
Notwithstanding, future research is encouraged to employ more recent data and
thereby avoid this time gap concern.
Third, inter-rater reliability regarding information on participatory manage-
ment practices may be a concern because responses regarding these practices
were provided by key informants (i.e. HR development and HR management
managers). The key informant approach may create a reliability issue (Gerhart
et al., 2000). However, the survey measured clearly defined, unambiguous practices
implemented within organizations, and key informants were most knowledgeable
about these organizational practices. These facts mitigate any concern about inter-
rater reliability for the measures of participatory management practices (Huselid
& Becker, 2000).
Fourth, the generalizability of the findings may be another concern because
we analyzed data from only large South Korean manufacturing firms. Given that
the existing literature on HR management-performance linkage is dominated by

the Western manufacturing setting; however, the findings of this study arguably
extend our understanding of the linkage to a relatively underexplored context.
Furthermore, given that the findings of this study are based on a contextual under-
standing of a specific set of organizational practices embedded in a specific organ-
izational context (Janssens & Steyaert, 2009), this study adds concrete empirical
knowledge to the existing literature on this topic.
Finally, although researchers (e.g. Delery, 1998; Jiang et al., 2012a) have pro-
posed additive, interactive, and substitutive relationships among HR practices,
substitutive relationships were not examined in this research. We focused only on
the synergy of these practices based on economic and psychological ownership
perspectives. Substitutive relationships suggest that HR practices work against
each other (Becker et al., 1997) or that implementing one HR practice is a waste of
resources in the presence of another HR practice (Delery, 1998). Further research
is necessary to empirically investigate those substitutive relationships among HR
practices in order to illuminate which practices within an HR system are less con-
ducive or more integral to relevant organizational outcomes (Wall & Wood, 2005).
Conclusion
This research substantiates the theory that organizational practices in different
domains can interact to have a positive relationship with firm profitability. The
results of this research are show both additive and interactive relationships of
organizational practices, specifically participatory management practices in the
manufacturing settings. Furthermore, the finding that sharing influences matters
more to organizations in a high power distance country than sharing financial
returns suggests the need for fit between organizational practices and cultural con-
text. This empirical knowledge is useful for establishment of policies and practices
according to cultural context. Despite the limitations of the study, this research
was based on existing theoretical perspectives of internal fit (Chadwick, 2010;
Jiang et al., 2012a) and economic (Milgrom & Roberts, 1992) and psychological
ownership (Pierce et al., 1991, 2001), as well as on a multi-source data-set with
objective financial data. We hope that our findings will help to effectively imple-
ment management practices that enable organizations to achieve financial success.
Notes
1.
S ee http://www.economywatch.com/world_economy/south-korea/structure-of-
economy.html
2.
Although the relatively low percentage of variance raises concerns regarding the
uni-dimensionality of involvement-oriented practices, we found positive significant
correlations among the five practices at p < .001, as well as their positive significant
correlations with ROE. These additional results support the validity of the measures
used for involvement-oriented practices.
22 A. Kim et al.
3.
For more information, please go to http://www.worldvaluessurvey.org/WVSContents.
jsp and see the section of findings and insights.
Funding
This work was supported by the National Research Foundation of Korea Grant funded by the
Korean Government [grant number NRF-2014S1A5A8019602].
References
Adegbesan, J. (2009). On the origins of competitive advantage: Strategic factor markets and
heterogeneous resource complementarity. Academy of Management Review, 34, 463–475.
Aiken, L. S., & West, S. G. (1991). Multiple regression: Testing and interpreting interactions.
Newbury Park, CA: Sage.
Arthur, J. B. (1994). Effects of human resource systems on manufacturing performance and
turnover. Academy of Management Journal, 37, 670–687.
Arthur, J. B., & Aiman-Smith, L. (2001). Gainsharing and organizational learning: An analysis
of employee suggestions over time. Academy of Management Journal, 44, 737–754.
Bae, J., Chen, S. J., Wan, T. W. D., Lawler, J. J., & Walumbwa, F. O. (2003). Human resource
strategy and firm performance in Pacific Rim countries. The International Journal of Human
Resource Management, 14, 1308–1332.
Baird, L., & Meshoulam, I. (1988). Managing two fits of strategic human resource management.
Academy of Management Review, 13, 116–128.
Bartol, K. M., & Locke, E. A. (2000). Incentives and motivation. In S. L. Rynes, & B. Gerhart
(Ed.), Compensation in organizations: Current research and practices (pp. 104–147). San
Francisco, CA: Jossey-Bass.
Batt, R. (2002). Managing customer services: Human resource practices, quit rates, and sales
growth. Academy of Management Journal, 45, 587–597.
Becker, G. S. (1964). Human capital. New York, NY: Columbia University Press.
Becker, B. E., & Huselid, M. A. (1998). High performance work systems and firm performance:
A synthesis of research and managerial implications. In G. R. Ferris (Ed.), Research in
personnel and human resources management (pp. 53–101). Greenwich, CT: JAI Press.
Becker, B. E., Huselid, M. A., Pickus, P. S., & Spratt, M. F. (1997). HR as a source of shareholder
value: Research and recommendations. Human Resource Management, 36, 39–47.
Ben-Ner, A., & Jones, D. C. (1995). Employee participation, ownership, and productivity: A
theoretical framework. Industrial Relations, 34, 532–554.
Bishop, J. W., Scott, K. W., & Burroughs, S. M. (2000). Support commitment, and employee
outcomes in a team environment. Journal of Management, 26, 1113–1132.
Bowen, D. E., & Ostroff, C. (2004). Understanding HRM-firm performance linkages: The role
of the ‘strength’ of the HRM system. Academy of Management Review, 29, 203–221.
Boxwell, P., & Macky, K. (2007). High-performance work systems and organizational
performance: Bridging theory and practice. Asia Pacific Journal of Human Resources, 45,
261–270.
Brewster, C. J., & Mayrhofer, W. (2013). Handbook of research in comparative human resource
management. London: Edward Elgar Publishing.
Campion, M. A., Cheraskin, L., & Stevens, M. J. (1994). Career-related antecedents and
outcomes of job rotation. Academy of Management Journal, 37, 1518–1542.
Cascio, W. F., & Boudreau, J. W. (2016). The search for global competence: From international
HR to talent management. Journal of World Business, 51, 103–114.
Chadwick, C. (2010). Theoretical insights on the nature of performance synergies in human

resource systems: Toward greater precision. Human Resource Management Review, 20,
85–101.
Chang, S. J., & Hong, J. (2002). How much does the business group matter in Korea? Strategic
Management Journal, 23, 265–274.
Collins, C. J., & Smith, K. G. (2006). Knowledge exchange and combination: The role of human
resource practices in the performance of high-technology firms. Academy of Management
Journal, 49, 544–560.
Combs, J., Liu, Y., Hall, A., & Ketchen, D. (2006). How much do high-performance work
practices matter? A meta-analysis of their effects on organizational performance Personnel
Psychology, 59, 501–528.
Cooke, W. M. (1994). Employee participation programs, group-based incentives, and company
performance: A union-nonunion comparison. Industrial and Labor Relations Review, 47,
594–609.
Cotton, J. L. (1993). Employee involvement: Methods for improving performance and work
attitudes. Newbury Park, CA: Sage.
Dastmalchian, A., Lee, S., & Ng, I. (2000). The interplay between organizational and national
cultures: A comparison of organizational practices in Canada and South Korea using the
competing values framework. The International Journal of Human Resource Management,
11, 388–412.
Datta, D. K., Guthrie, J. P., & Wright, P. M. (2005). Human resource management and labor
productivity: Does industry matter? Academy of Management Journal, 48, 135–145.
De Cieri, H., Cox, J. W., & Fenwick, M. (2007). A review of international human resource
management: Integration, interrogation, imitation. International Journal of Management
Reviews, 9, 281–302.
Dean Jr., J. W., & Snell, S. A. (1991). Integrated manufacturing and job design: Moderating
effects of organizational inertia. Academy of Management Journal, 34, 776–804.
Delery, J. E. (1998). Issues of fit in strategic human resource management: Implications for
research. Human Resource Management Review, 8, 289–309.
Delery, J. E., & Doty, D. H. (1996). Modes of theorizing in strategic human resource management:
Tests of universalistic, contingency, and configurational performance predictions. Academy
of Management Journal, 39, 802–835.
Deutsch, M. (1949). A theory of co-operation and competition. Human Relations, 2, 129–152.
Eisenhardt, K. M. (1989). Agency theory: An assessment and review. Academy of Management
Review, 14, 57–74.
Ennen, E., & Richter, A. (2010). The whole is more than the sum of its parts – Or is it? A review
of the empirical literature on complementarities in organizations. Journal of Management,
36, 207–233.
Farndale, E. (2010). What is really driving differences and similarities in HRM across national
boundaries in Europe. European Journal of International Management, 4, 362–381.
Freeman, R. B., Kruse, D .L., & Blasi, J. R. (2010). Worker responses to shirking under shared
capitalism. In D. L. Kruse, R. B. Freeman, & J. R. Blasi (Ed.), Shared capitalism at work:
Employee ownership, profit sharing, gainsharing, and broad-based stock options (pp. 77–104).
Chicago, IL: University of Chicago Press.
Freeman, R. B., & Medoff, J. L. (1984). What do unions do? New York, NY: Basic Books.
Fulmer, I. S., Gerhart, B., & Scott, K. S. (2003). Are the 100 best better? An empirical investigation
of the relationship between being a ‘great place to work’ and firm performance. Personnel
Psychology, 56, 965–993.
Gerhart, B. (2007). Horizontal and vertical fit in human resource systems. In C. Ostroff, &
T. A. Judge (Ed.), Perspectives on organizational fit (pp. 317–350). Hillsdale, NJ: Erlbaum.
24 A. Kim et al.
Gerhart, B. (2009). How much does national culture constrain organizational culture?
Management and Organization Review, 5, 241–259.
Gerhart, B., Wright, P. M., McMahan, G., & Snell, S. A. (2000). Measurement error in research
on human resources and firm performance: How much error is there and how does it
influence effect size estimates? Personnel Psychology, 53, 803–834.
Glew, D. J., O’Leary-Kelly, A. M., Griffin, R. W., & VanFleet, D. D. (1995). Participation in
organizations: A preview of the issues and proposed framework for future analysis. Journal
of Management, 21, 395–421.
Godard, J., & Delaney, J. T. (2000). Reflections on the ‘high performance’ paradigm’s implications
for industrial relations as a field. Industrial and Labor Relations Review, 53, 482–502.
Gooderham, P. N., Morley, M. J., Parry, E., & Stavrou, E. (2015). National and firm-level drivers
of the devolution of HRM decision making to line managers. Journal of International Business
Studies, 46 , 715–723.
Hatch, N. W., & Dyer, J. H. (2004). Human capital and learning as a source of sustainable
competitive advantage. Strategic Management Journal, 25, 1155–1178.
Hitt, M. A., Bierman, L., Shimizu, K., & Kochhar, R. (2001). Direct and moderating effects
of human capital on strategy and performance in professional firms: A resource-based
perspective. Academy of Management Journal, 44, 13–28.
Hoerl, R. W. (2001). Six sigma black belts: What do they need to know? Journal of Quality
Technology, 33, 391–435.
Hofstede, G. (1991). Cultures and organizations: Software of mind. London: McGraw-Hill.
Huselid, M. A. (1995). The impact of human resource management on turnover, productivity,
and corporate financial performance. Academy of Management Journal, 38, 635–672.
Huselid, M. A., & Becker, B. E. (2000). Comment on ‘measurement error in research on human
resources and firm performance: How much error is there and how does it influence effect
size estimates?’ by Gerhart, Wright, McMahan, and Snell. Personnel Psychology, 53, 835–854.
Huselid, M. A., & Becker, B. E. (2011). Bridging micro and macro domains: Workforce
differentiation and strategic human resource management. Journal of Management, 37,
421–428.
Ichniowski, C., & Shaw, K. (2003). Beyond incentive pay: Insiders’ estimates of the value of
complementary human resource management practices. Journal of Economic Perspectives,
17, 155–180.
Ichniowski, C., Shaw, K., & Prennushi, G. (1997). The effects of human resource management
practices on productivity: A study of steel finishing lines. American Economic Review, 87,
291–313.
Jablonski, J. R. (1991). Implementing total quality management: An overview. San Diego, CA:
Pfeiffer.
Jackson, S. E. (1983). Participation in decision making as a strategy for reducing job-related
strain. Journal of Applied Psychology, 68, 3–19.
Jackson, S. E., & Schuler, R. S. (1995). Understanding human resource management in the
context of organizations and their environments. Annual Review of Psychology, 46, 237–264.
Jackson, S. E., Schuler, R. S., & Jiang, K. (2014). An aspirational framework for strategic human
resource management. The Academy of Management Annals, 8, 1–56.
Jansen, J. J. P., Van Den Bosch, F. A. J., & Volberda, H. W. (2005). Managing potential and
realized absorptive capacity: How do organizational antecedents matter? Academy of
Management Journal, 48, 999–1015.
Janssens, M., & Steyaert, C. (2009). HRM and performance: A plea for reflexivity in HRM
studies. Journal of Management Studies, 46, 143–155.
Jiang, Y., Colakoglu, S., Lepak, D. P., Blasi, J. R., & Kruse, D. L. (2015). Involvement work
systems and operational effectiveness: Exploring the moderating effect of national power
distance. Journal of International Business Studies, 46, 332–354.
Jiang, K., Lepak, D. P., Han, K., Hong, Y., Kim, A., & Winkler, A. (2012a). Clarifying the
construct of human resource systems: Relating human resource management to employee
performance. Human Resource Management Review, 22, 73–85.
Jiang, K., Lepak, D. P., Hu, J., & Baer, J. (2012b). How does human resource management
influence organizational outcomes? A meta-analytic investigation of the mediating
mechanism. Academy of Management Journal, 55, 1264–1294.
Jones, D. C., Kalmi, P., Kato, T., & Mäkinen, M. (2012). Financial participation in Finland:
Incidence and determinants. The International Journal of Human Resource Management,
23, 1570–1589.
Kato, T., Lee, J. H., Lee, K., & Ryu, J. (2005). Employee participation and involvement in Korea:
Evidence from a new survey and field research. International Economic Journal, 19, 251–281.
Kato, T., & Morishima, M. (2002). The productivity effects of participatory employment
practices: Evidence from New Japanese panel data. Industrial Relations, 41, 487–520.
Kepes, S., & Delery, J. E. (2007). HR policy and the problem of internal fit. In P. Boxall, J. Purcell,
& P. Wright (Ed.), The Oxford university press handbook of human resource management (pp.
385–404). Oxford: Oxford University Press.
Kepes, S., Delery, J. E., & Gupta, N. (2008). Strategic human resource management: A systems
perspective. Academy of Management Proceedings, 1–6.
Kim, D. (2005). The benefits and costs of employee suggestions under gainsharing. Industrial
and Labor Relations Review, 58, 631–652.
Kim, Y., & Ployhart, R. E. (2014). The effects of staffing and training on firm productivity and
profit growth before, during, and after the Great Recession. Journal of Applied Psychology,
99, 361–389.
Koch, M. J., & Mcgrath, R. G. (1996). Improving labor productivity: Human resource
management policies do matter. Strategic Management Journal, 17, 335–354.
Kruse, D. L. (1993). Profit sharing: Does it make a difference?. Kalamazoo, MI: W.E. Upjohn
Institute for Employment Research.
Kruse, D. L., Freeman, R. B., & Blasi, J. R. (Eds.). (2010). Shared capitalism at work: Employee
stock ownership, profit and gain sharing, and broad-based stock options. Chicago, IL:
University of Chicago Press.
Lawler III, E. E. (1986). High-involvement management. San Francisco, CA: Jossey-Bass.
Lawler III, E. E., Mohrman, S. A., & Benson, G. S. (2001). Organizing for high performance:
The CEO report on employee involvement, TQM, reengineering, and knowledge management
in fortune 1000 companies. San Francisco, CA: Jossey-Bass.
Lee, S. (1998). Organizational flexibility in Korean companies: Rules and procedures on
managerial discretion and employee behavior. The International Journal of Human Resource
Management, 9, 478–493.
Lepak, D. P., Liao, H., Chung, Y., & Harden, E. E. (2006). A conceptual review of human
resource management systems in strategic human resource management research. In J. J.
Martocchio (Ed.), Research in personnel and human resource management (pp. 217–271).
Greenwich, CT: JAI Press.
Lepak, D. P., & Shaw, J. D. (2008). Strategic HRM in North America: Looking to the future.
The International Journal of Human Resource Management, 19, 1486–1499.
Lewin, K. (1943). Defining the ‘field at a given time’. Psychological Review, 50, 292–310.
Liao, H., & Chuang, A. (2004). A multilevel investigation of factors influencing employee
service performance and customer outcomes. Academy of Management Journal, 47, 41–58.
26 A. Kim et al.
Linderman, K., Schroeder, R. G., & Choo, A. S. (2006). Six sigma: The role of goals in
improvement teams. Journal of Operations Management, 24, 779–790.
Litwin, A. S. (2011). Technological change at work: The impact of employee involvement on
the effectiveness of health information technology. Industrial and Labor Relations Review,
64, 863–888.
Loughran, T., & Ritter, J. (1997). The operating performance of firms conducting seasoned
equity offerings. The Journal of Finance, 52, 1823–1850.
Macduffie, J. P. (1995). Human resource bundles and manufacturing performance:
Organizational logic and flexible production systems in the world auto industry. Industrial
and Labor Relations Review, 48, 197–221.
Magnan, M., & St-Onge, S. (2005). The impact of profit sharing on the performance of financial
services firms. Journal of Management Studies, 42, 761–791.
Milgrom, P., & Roberts, J. (1992). Economics, organization, and management. Englewood Cliffs,
NJ: Prentice Hall.
Munchus III, G. (1983). Employer-employee based quality circles in Japan: Human resource
policy implications for American firms. Academy of Management Review, 8, 255–261.
Noe, R. A., Hollenbeck, J. R., Gerhart, B., & Wright, P. M. (2013). Human resource management:
Gaining a competitive advantage (8th ed.). New York, NY: McGraw-Hill/Irwin.
Paauwe, J. (2009). HRM and performance: Achievements, methodological issues and prospects.
Journal of Management Studies, 46, 129–142.
Pande, P. S., Neuman, R. P., & Cavangh, R. R. (2000). The six sigma way: How GE, Motorola,
and other top companies are honing their performance. New York, NY: McGraw Hill.
Park, R., Appelbaum, E., & Kruse, D. L. (2010). Employee involvement and group incentives
in manufacturing companies: A multi-level analysis. Human Resource Management Journal,
20, 227–243.
Pendleton, A., & Robinson, A. (2010). Employee stock ownership, involvement, and
productivity: An interaction-based approach. Industrial and Labor Relations Review, 64,
3–29.
Peterson, S. J., & Luthans, F. (2006). The impact of financial and nonfinancial incentives on
business-unit outcomes over time. Journal of Applied Psychology, 91, 156–165.
Pierce, J. L., Kostova, T., & Dirks, K. T. (2001). Toward a theory of psychological ownership in
organizations. Academy of Management Review, 26, 298–310.
Pierce, J. L., Rubenfeld, R. A., & Morgan, S. (1991). Employee ownership: A conceptual model
of process and effects. Academy of Management Review, 16, 121–144.
Pischke, J. S. (2001). Continuous training in Germany. Journal of Population Economics, 14,
523–548.
Ployhart, R. E., & Moliterno, T. P. (2011). Emergence of the human capital resource: A multilevel
model. Academy of Management Review, 35, 127–150.
Poutsma, E., Lighthart, P. E. M., & Veersma, U. (2006). The diffusion of calculative and
collaborative HRM practices in European firms. Industrial Relations, 45, 513–546.
Powell, T. C. (1995). Total quality management as competitive advantage: A review and
empirical study. Strategic Management Journal, 16, 15–37.
Richard, P. J., Devinney, T. M., Yip, G. S., & Johnson, G. (2009). Measuring organizational
performance: Towards methodological best practice. Journal of Management, 35, 718–804.
Robinson, A., & Wilson, N. (2006). Employee financial participation and productivity: An
empirical reappraisal. British Journal of Industrial Relations, 44, 31–50.
Schuler, R. S., & Jackson, S. E. (1987). Linking competitive strategies with human resource
management practices. Academy of Management Executive, 1, 207–219.
Schuler, R. S., & Jackson, S. E. (2014). Human resource management and organizational
effectiveness: Yesterday and today. Journal of Organizational Effectiveness: People and
Performance, 1, 35–55.
Schuler, R. S., Jackson, S. E., & Tarique, I. (2011). Global talent management and global talent
challenges: Strategic opportunities for IHRM. Journal of World Business, 46, 506–516.
Snell, S. A., & Dean Jr., J. W. (1992). Integrated manufacturing and human resource management:
A human capital perspective. Academy of Management Journal, 35, 467–504.
Steers, R., Shin, Y. K., & Ungson, G. (1989). The Chaebol: Korea’s new industrial might. New
York, NY: Harper and Row.
Takeuchi, R., Lepak, D. P., Wang, H., & Takeuchi, K. (2007). An empirical examination of the
mechanisms mediating between high-performance work systems and the performance of
Japanese organizations. Journal of Applied Psychology, 92, 1069–1083.
Wageman, R., & Baker, G. (1997). Incentives and cooperation: The joint effects of task and
reward interdependence on group performance. Journal of Organizational Behavior, 18,
139–158.
Wall, T. D., & Wood, S. J. (2005). The romance of human resource management and business
performance, and the case for big science. Human Relations, 58, 429–462.
Weitzman, M., & Kruse, D. L. (1990). Profit sharing and productivity. In A. Blinder (Ed.), Paying
for productivity: A look at the evidence (pp. 95–114). Washington, DC: Brookings Institution.
Welbourne, T. M., & Gomez-Mejia, L. R. (1995). Gainsharing: A critical review and a future
research agenda. Journal of Management, 21, 559–609.
Wright, P. M., & McMahan, G. C. (1992). Theoretical perspective for strategic human resource
management. Journal of Management, 18, 295–320.
Wright, P. M., & Snell, S. A. (1998). Toward a unifying framework for exploring fit and flexibility
in strategic human resource management. Academy of Management Review, 23, 756–772.
Yang, I. (2014). Cross-cultural perceptions of clan control in Korean multinational companies:
A conceptual investigation of employees’ fairness monitoring based on cultural values.
International Journal of Human Resource Management, 26, 1076–1097.
Youndt, M. A., Snell, S. A., Dean Jr., J. W., & Lepak, D. P. (1996). Human resource management,
manufacturing strategy, and firm performance. Academy of Management Journal, 39, 836–
866.

Kim 2016

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Kim 2016

Uploaded by

Copyright:

Available Formats

The International Journal of Human Resource

ISSN: 0958-5192 (Print) 1466-4399 (Online) Journal homepage: http://www.tandfonline.com/loi/rijh20

The relationships among participatory

Andrea Kim, Kyongji Han & Yongguen Kim

To link to this article: http://dx.doi.org/10.1080/09585192.2016.1239218

Published online: 03 Oct 2016.

Submit your article to this journal

View related articles

View Crossmark data

Full Terms & Conditions of access and use can be found at

The relationships among participatory management

CONTACT Andrea Kim akim@skku.edu

HR systems (Arthur, 1994), and high-investment HR systems (Koch & Mcgrath,

participatory work systems used in the South Korean manufacturing industry.

An internal fit perspective

Ostroff (2004) noted, HR practices serve as a signaling function, transmitting the

Equity and involvement as two domains of participatory management

behaviors of colleagues and managers. On-the-job training is widely recognized

The additive effects of components within the same HR policy domain

organizations achieve higher levels of performance. Given that financial returns

Hypothesis 2: An additive index of organizational practices in the involvement domain

Figure 1. A theoretical model.

The interactive effects of components in different HR policy domains on

fundamental to enhancing the effectiveness of employee involvement practices,

Sample and procedure

stratified random sampling method in consideration of the type of industry (i.e.

Table 1. Descriptive statistics and correlations.a

6. Main business 6 .03 .18 −.06 −.05 −.02 −.03 −.07

Table 2. Results of regression analyses on ROE.

Figure 2. An interaction plot.

We employed an interaction plot to show how the effects of HR practices in

The results of this research contribute to an improved understanding of how

patterns of relationships among HR practices, while a few studies have empir-

and cooperative behaviors required to strengthen employee knowledge, skills,

involvement-oriented practices are more instrumental than equity-based practices

to firm profitability, because only involvement-oriented practices have a direct

Limitations and future research directions

the existing literature on HR management-performance linkage is dominated by

Chadwick, C. (2010). Theoretical insights on the nature of performance synergies in human

You might also like