A High-Growth Firm Contingency Test of the Formalization-Performance Relationship

The effect of formalization in high-growth firms' performance is still unclear. We propose that formal commitment-based human resource practices contribute positively to the financial performance of established high-growth firms but have little effect on emergent ones. Using a sample of 101 Portuguese high-growth firms (2006-2009 period), we tested the effect of formal HR practices during the high-growth period in their financial results two years later (2011). Our results suggest that adopting a formal performance appraisal and a formal R&D function contributed positively for the performance of only established firms, while adopting a formal training activity negatively affected the performance of only emergent firms.