Unpacking the relationship between high-performance work systems and innovation performance in SMEs
| DOI | https://doi.org/10.1108/PR-10-2016-0271 |
| Published date | 04 June 2019 |
| Pages | 977-1000 |
| Date | 04 June 2019 |
| Author | Khuram Shahzad,Pia Arenius,Alan Muller,Muhammad Athar Rasheed,Sami Ullah Bajwa |
| Subject Matter | Hr & organizational behaviour |
Unpacking the relationship
between high-performance work
systems and innovation
performance in SMEs
Khuram Shahzad
Department of Management, School of Business and Economics,
University of Management and Technology, Lahore, Pakistan and
School of Management, Royal Melbourne Institute of Technology,
Melbourne, Australia
Pia Arenius
School of Management, Royal Melbourne Institute of Technology, Melbourne, Australia
Alan Muller
Faculty of Economics and Business, University of Groningen,
Groningen, The Netherlands, and
Muhammad Athar Rasheed and Sami Ullah Bajwa
Department of Management, School of Business and Economics,
University of Management and Technology, Lahore, Pakistan
Abstract
Purpose –The purpose of this p aper is to explore th e black box between hi gh-performance work
systems (HPWS) and innovation performance in small- and medium-sized enterprises (SMEs).
Through application of the ability, motivation and opportunity (AMO) framework, the study examines
the mediating roles of innovation-specific ability, motivation and voice behaviors between HPWS and
SMEs’innovation performance.
Design/methodology/approach –The hypotheses are tested on data collected through a self-administered
questionnaire from 237 SMEs in Pakistan.
Findings –Findings indicate that human capital, motivation and employee voice fully mediate the
relationship between HPWS and innovation performance in SMEs.
Research limitations/implications –The cross-sectional research design and self-reported measures
warrant caution for the interpretation of findings. Future research may consider a longitudinal research
design and objective measures.
Practical implications –SMEs need to invest in the adoption and implementation of HPWS that will
develop innovation-specific abilities, motivation and voice behaviors simultaneously among employees that
will lead to higher innovation performance.
Originality/value –This is the first study of its kind utilizing an AMO framework to investigate the
underlying mechanism through which HPWS affect innovation performance in SMEs.
Keywords Innovation, Quantitative, Employee voice, High-performance work systems,
Small- to medium-sized enterprises (SME), The ability, motivation and opportunity framework
Paper type Research paper
1. Introduction
High-performance work systems (HPWS) have been shown to improve the innovation
performance of firms (Escribá-Carda et al., 2017). However, review of the literature reveals
that past studies have focused on large organizations and overlooked how HPWS contribute
to innovation performance in the context of small- and medium-sized enterprises (SMEs)
(Andries and Czarnitzki, 2014; Gilman and Raby, 2013; Rasheed et al., 2017). Investigation of
Personnel Review
Vol. 48 No. 4, 2019
pp. 977-1000
© Emerald PublishingLimited
0048-3486
DOI 10.1108/PR-10-2016-0271
Received 7 October 2016
Revised 25 August 2018
20 October 2018
Accepted 11 November 2018
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0048-3486.htm
977
HPWS and
innovation
performance
in SMEs
HPWS in SMEs is important (Patel and Conklin, 2012) because SMEs’competitiveness is
essentially determined by their innovation performance (Curado et al., 2018; Soto-Acosta
et al., 2017). Scholars assert that SMEs differ from large firms in their approach to adopt and
implement HPWS due to several factors, such as scarcity of resources, absence of
bureaucracy, informal and flexible structures, fire-fighting mentality and easier
communications (Sheehan, 2014; Terziovski, 2010). However, our understanding of how
HPWS affect innovation performance in the SME context remains underdeveloped
(Drummond and Stone, 2007; Torre and Solari, 2011).
Most prior studies on large firms have used the resource-based view (RBV ) or human
capital theory (HCT) to explain the HPWS–innovation performance relationship by
conceptualizing human capital –i.e., knowledge, skills and abilities (KSAs) –as a prime
source of competitive advantage (Razouk, 2011; Takeuchi et al., 2007). However, there is a
consensus emerging about the mediating role of behavioral factors such as employees’
motivation and extra-role behaviors as the “causal link which flows from practices
through people to performance”in the SME context (Ramsay et al., 2000, p. 502). Scholars
argue that HPWS can simultaneously improve the KSAs of employees, increase their
motivation and encourage them to exhibit requisite behaviors for higher innovation in
SMEs (Drummond and Stone, 2007). Despite these insights, there is a lack of research that
has conceptualized the requisite human capital and behaviors of employees in a
single framework to identify the mediating mechanism through which HPWS may
influence innovation performance in SMEs.
We argue that the ability, motivation and opportunity (AMO) model (Appelbaum et al.,
2000) is well suited to explain the HPWS–innovation relationship in the SME context. The
AMO model assumes that the achievement of an organization’s strategic goals is a function
of employees’AMO to perform specific tasks/roles (Boxall, 2003). These distinct but
interrelated components complement each other in the process and therefore in the absence
of any of these components, it may be unlikely that an HR system can influence organization
innovation goals (Almutawa et al., 2016; Bos-Nehles et al., 2013). Ramsay et al. (2000) argue
that “it is this logic of interdependent effects that makes the HPWS argument distinctive,”
because it “entails a causal path in which worker outcomes mediate between HPWS
practices and performance”(p. 504). Since HPWS and AMO both contain the notion of
interrelatedness and complementarity, the conceptualization of employees’AMO as
a mediating mechanism seems logical and a better theoretical approach to unpack the
HPWS–innovation “black box”in the SME context.
Therefore, in light of the aforementioned gap and suggestions given by contemporary
scholars (Bowen and Ostroff, 2004; Chang and Chen, 2011; Obeidat et al., 2016), this research
explicates the roles of three AMO-derived elements, namely human capital, motivation and
voice, as mediators in the HPWS–innovation relationship in the SME context. Our analysis
of 237 SMEs in Pakistan lends full support to these arguments.
2. Theoretical background and hypothesis development
The RBV and HCT lenses typically used to understand the HPWS–innovation performance
relationship (Boxall, 1996; Razouk, 2011) mainly take a cognitive perspective (Huber, 1991)
in assuming that innovation performance can be achieved by attracting, developing,
utilizing and retaining superior human capital (Iverson and Zatzick, 2011; Wright et al.,
2003). However, scholars taking a behavioral perspective argue that SMEs innovation
performance is also dependent on employees’requisite emotional responses an d
discretionary behaviors that may be stimulated by organizational factors (Morrison,
2011; Piccolo and Colquitt, 2006; Terziovski, 2010).
In order to incorporate both cognitive and behavioral aspects in our study, we use an
AMO framework (Appelbaum et al., 2000; Jiang, Lepak, Han, Hong, Kim and Winkler, 2012)
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