This article seeks to explore the black box mediating between human resource management practices and firm performance. It is hypothesized that high performance work systems develop organizational human capital, which in turn, positively affect firm performance. Two organizational antecedents are also hypothesized to lead to the implementation of high performance work systems. They are a top management value that sees human resources and human resource management practices as major sources of competitive advantage, and organizational strategy that seeks to differentiate by product or service innovation. These hypotheses were tested by analysing questionnaires from 62 human resource managers and 206 engineers in 77 information technology companies. Research findings suggest that organizational human capital (employee competencies and commitment) mediates the relationship between high performance work systems and firm performance. Top management human resource values and organizational strategy have a joint effect on the implementation of high performance work systems. This study is exploratory and findings are not conclusive. The implications and limitations of this study are discussed.
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