High-performance work systems and organisational performance:Evidence from the Vietnamese service sector

Abstract

Despite the plethora of research scrutinising the role of high performance work systems (HPWS) in enhancing organisational performance, there is little consensus about the structure of these systems and processes underlying its relationship to organisational and individual outcomes. This research therefore advances the existing literature by conducting a more in-depth study of how and why HPWS relate to organisational performance. In particular, I adopt the mixed methods approach to uncover unexplored issues regarding the efficacy of HPWS on organisational performance. The qualitative phase of research examines managers‟ perceptions of HPWS in Vietnamese service organisations, based on a sample of 17 semi-structured interviews as many firms. The interview protocol is deployed as a rough guide to the discussion, and the data are analysed through content analysis. The findings demonstrate that HPWS have been pursued and valued by Vietnamese organisations. The interviewees help to conceptualise the construct of HPWS in the Vietnamese context and provide evidence that the use of HPWS impacts both employee outcomes (e.g., employee attitudes, behaviours, creativity, productivity), and organisational performance (e.g., firm growth, profit growth and market performance). The evidence also establishes a linkage between HR practices and organisational innovation. Despite the small sample size, the in-depth data reveal useful insights regarding the prevalence of HPWS in the Vietnamese context and form the foundation for validating a scale for HPWS for the research context. The quantitative phase of research develops a multilevel model of how HPWS influences both individual- and firm-level performance, based on self-determination theory, AMO theory and componential theory of creativity. Using a multilevel data set of 56 service firms (109 managers, 526 employees working with 153 supervisors), the M-plus software (Version 7.3) is adopted to test the hypothesized multilevel structural equation models. The findings demonstrate that the proposed hypotheses are mostly supported at the levels of analysis. At the firm-level, (1) collective human capital, climate for initiative and climate for psychological safety partially mediate the relationship between HPWS execution and firm-level innovation; and (2) the relationship between firm-level innovation and firm market performance is moderated by environmental uncertainty. At the individual-level, (1) trust in management and trust in supervisor partially mediate the relationship between HPWS perception and employee creativity; and (2) the relationship between trust in management and trust in supervisor and employee creativity is not positively moderated by employee psychological empowerment. At the cross-level, (1) HPWS execution positively influences HPWS perception; (2) the relationship between HPWS execution and trust in management, trust in supervisor is partially mediated by HPWS perception; (3) employee creativity, in turn mediates the relationship between trusts in management and supervisor, and firm-level innovation; (4) and firm-level innovation mediates the link between employee creativity and firm market performance. The findings highlight the importance of new mechanisms including mediating and moderating components (i.e., trusts in management and supervisor, creativity and environmental uncertainty) in the HPWS – performance relationship. By analysing the mixture of qualitative and quantitative data, the current study enriches our understanding of the underlying mechanisms through which HPWS influences organisational performance outcomes.