What Results When Firms Implement Practices: The Differential Relationship between Specific Practices, Firm Financial Performance, Customer Service, and Quality
Journal of Applied Psychology, Forthcoming
33 Pages Posted: 16 May 2007
Previous research on organizational practices is replete with contradictory evidence regarding their effects. Here, we argue that these contradictory findings may have occurred because researchers have often examined complex practice combinations, and have failed to investigate a broad variety of firm-level outcomes. Thus, past research may obscure important differential effects of specific practices on specific firm-level outcomes. Extending this research, we develop hypotheses about the effects of practices that 1) enable information-sharing, 2) set boundaries, and 3) enable teams on three different firm-level outcomes: financial performance, customer service, and quality. Relationships are tested in a sample of observations from over two hundred Fortune 1000 firms. Results indicate that information-sharing practices are positively related to financial performance one year following implementation of the practices; boundary-setting practices are positively related to firm-level customer service; and team-enabling practices are related to firm-level quality. No one set of practices predicted all three firm-level outcomes, indicating practice-specific effects. Our findings help resolve the theoretical tension in the literature regarding the effects of organizational practices, and offer guidance as to how to best target practices to increase specific work-related outcomes. Implications for theory, research, and practice are discussed.
Keywords: empowerment, firm practices, firm financial performance, customer service, quality
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