Participatory HRM and firm performance. Unlocking the box through organizational climate and employee outcomes
| Date | 02 August 2019 |
| Pages | 1098-1119 |
| DOI | https://doi.org/10.1108/ER-05-2018-0147 |
| Published date | 02 August 2019 |
| Author | Neha Gahlawat,Subhash C. Kundu |
| Subject Matter | Hr & organizational behaviour,Industrial/labour relations,Employment law |
Participatory HRM
and firm performance
Unlocking the box through organizational
climate and employee outcomes
Neha Gahlawat
Department of Human Resources, ICFAI Business School (IBS), Hyderabad,
ICFAI Foundation of Higher Education (IFHE) University, Hyderabad, India, and
Subhash C. Kundu
Haryana School of Business,
Guru Jambheshwar University of Science and Technology, Hisar, India
Abstract
Purpose –The purpose of this paper is to examine the relationship between participatory HRM and firm
performance through a series of mediators.
Design/methodology/approach –Primary data were collected from 569 respondents belonging to
207 organizations operating in India. Structural equation modeling and bootstrapping via PROCESS were
used to analyze the hypothesized relationships between participatory HRM and firm performance.
Findings –The study has highlighted that participatory HRM in the form of self-managed teams, flexible
work arrangements and empowerment results in better organizational climate, heightened affective
commitment, reduced intention to leave and enhanced firm performance. Furthermore, it has been established
that organizational climate, affective commitment and intention to leave serially mediate the relationship
between participatory HRM and firm performance.
Practical implications –The study gives strong indications that adopting bundle of participatory HRM
practices is beneficial for generating positive organizational climate, enhanced employee attitudes and
superior firm performance.
Originality/value –By establishing serial mediation through organizational climate, affective commitment
and employees’intention to leave, this study brings new insights into the interpretation of underlying
mechanism existing between participatory HRM and firm performance, thus uniquely contributes to the HRM
and OB literature.
Keywords India, Firm performance, Affective commitment, Intention to leave, Organizational climate,
Participatory HRM
Paper type Research paper
Introduction
Over the last two decades, business environment in India has accelerated at a very fast pace
both economically and socially, along with the dramatic improvements in HR practices in
organizations (Bhatnagar and Sharma, 2005; Cappelli et al., 2010). Constant increase in the
number of western organizations having business relations or established branches in India
has transformed HRM function to a considerable extent both in theory and the practice
(Gomes et al., 2015). The HRM function in India has evolved from traditional “personnel
management”perspective to a more focused and holistic approach “strategic HRM”
(Budhwar and Varma, 2010). Organizations have now realized that in order to survive and
compete in modern knowledge-based developing economy, it is vital to attain and retain the
world class human resource competencies through developments in HR practices essential
for sustaining such resources (Khandekar and Sharma, 2005; Moideenkutty et al., 2011).
With the use of progressive HRM systems, HR managers put emphasis on developing the
human capital in organizations while ensuring that the right environment is created for
employees to reap the benefits of these participation-related practices (Birdi et al., 2008;
Employee Relations: The
International Journal
Vol. 41 No. 5, 2019
pp. 1098-1119
© Emerald PublishingLimited
0142-5455
DOI 10.1108/ER-05-2018-0147
Received 29 May 2018
Revised 1 October 2018
3 February 2019
10 March 2019
Accepted 1 April 2019
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0142-5455.htm
1098
ER
41,5
Kundu and Gahlawat, 2016). The interests of both researchers and practitioners lie in
knowing what kind of contemporary western HRM systems are successful in organizations
operating in India.
It has been observed that the studies on the novel HRM models–performance link are
very thin on the ground in the Indian context (Agarwala, 2003; Som, 2008; Guchait and Cho,
2010; Kundu and Gahlawat, 2016). The present study has been mainly conducted to fill this
gap by investigating the effectiveness of one such contemporary HRM system, i.e.
participatory HRM. We specifically opted to determine the efficacy of participatory HRM
because of its narrow focus in comparison to other trending HRM systems. In the case
of the other contemporary HRM systems, namely, high-performance work system or
high-involvement work systems, the HR practitioner’s focus lies in adopting the set of HR
practices that concurrently enhance abilities, motivation and opportunities among
employees (Appelbaum et al., 2000). However, with the use of participatory HRM, the
singular emphasis is placed on enhancing the opportunity dimension in organizations,
thereby increasing the participation on the part of employees. India is known to be a
high-power distance country that means appreciation for hierarchy and a top-down
decision-making structure in both society and in organizations is very high (Hofstede, 2001;
Kundu and Gahlawat, 2012). Therefore, it is interesting to determine the extent to which
participatory HRM can impact firm performance in the Indian context.
In order to measure the impact of HRM systems, Bowen andOstroff (2004) have identified
the two features of HRM systems that are crucial to be considered. One is related to the
“content”part of the HRM systemwhere the emphasis is saidto be placed upon the type of HR
practices that are to be included in the set or bundle. The assumption is that the more
complementary the individual HR practices are, the higher is their contribution toward firm
performance. Other feature deliberates upon the “process”of HRM system where the
importance is suggested to be placed upon the manner or underlying mechanism through
which the employees attach meaning to the implementation of that particular HRM system
which is further held responsible for higher firm performance (Bowen and Ostroff, 2004;
Katou et al., 2014). In the currentstudy, analyzing the effectsof a bundle of participatory HRM
practiceswill be representing the contentfeature and in order to assess the processfeature, we
are proposinga series of mediators to be tested. Priorevidence suggests that HR practicesare
perceived as means on the basis of which employees form shared beliefs, attitudes and
behaviors toward the workplace (Bowen and Ostroff, 2004), and these, in turn, are linked to
organizational outcomes (Huselid, 1995; Nishii and Wright, 2008; Boxall et al., 2011).
Boxall and Macky (2009) too recommended that HRM systems affect a range of variables,
more proximally, at the individual level that must be assessed in the space between HR
practices and organizational outcomesso as to better estimate the HRM system–performance
model. Based on these arguments, we assume that participatory HRM assists employees in
perceiving a positive organizational climate which, in turn, induces favorable work attitudes
and behaviors among employees in the form of higher affective commitment and reduced
intention to leave, and these further have a positive impact on firm performance.
Precisely, in order to better understand the underlying mechanisms between the
participatory HRM and performance, this study has investigated several sequential indirect
paths to explain this relationship (through organizational climate, affective commitment and
intention to leave; see Figure 1). So far, scholars have tested the presence of one or two
mediated paths, mainly including affective commitment (Han et al., 2010; Laschinger et al.,
2002) and psychological empowerment (Kazlauskaite et al., 2012) in exploring the
relationship between participatory HRM and firm performance. By acknowledging the
presence of hierarchy among the individual and organizational level variables (Wright and
Haggerty, 2005; Nishii and Wright, 2008), the current study attempts to bring new insights
into participatory HRM and performance relationship. Being the first of its kind in a
1099
Participatory
HRM and firm
performance
To continue reading
Request your trial