This research investigates the relationship between high-performance work systems
(HPWS) and organizational performance, and the mediating effect of employee
outcomes. The paper is based on a sample of 168 firms of six ownership types and in
various business sectors operating in China. The results of data analysis support the
hypotheses. Organizational performance is positively predicted by HPWS and
employee outcomes, and employee outcomes positively mediate the relationship
between HPWS and organizational performance. This paper supports the theory that
HPWS positively impacts organizational performance and explains the mechanisms
through which HPWS enhances organizational performance. It also responds to the
long-standing call for stressing the importance of employee-related factors in the
HRM–performance linkage.