Structuring for High Reliability: HR Practices and Mindful Processes in Reliability-Seeking Organizations

Abstract

Summary This paper theoretically and empirically connects the literature on high-reliability organizations (HROs) to a broader set of organizations, which we call reliability-seeking organizations. Unlike HROs, which operate high-hazard technologies, reliability-seeking organizations operate in high-hazard environments. Reliability-seeking organizations are tightly coupled to their unpredictable and complex environments in such a manner that although the human mortality rate is low, the risk of small failures amplifying into organizational mortality is high. To cope with these environments, reliability-seeking organizations organize to remain open and flexible to emerging information and achieve the reliability demanded by their environments – intensity of innovation. These organizations utilize skilled temporary employees, positive employee relations, and an emphasis on training to innovate, and, in turn, generate greater financial performance. We test these hypotheses using a sample of 184 initial public offering (IPO) software firms that conducted their IPO between 1993 and 1996 and our results are consistent with our theorizing. Firms that utilized these human resource practices innovated more frequently and firms with more innovations had higher stock prices over time. Our findings combine to suggest a theoretical model of structural antecedents of a different type of reliability – intensity of innovation.