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http://www.iaeme.com/IJM/index.asp 387 [email protected] International Journal of Management (IJM) Volume 11, Issue 9, September 2020, pp. 387-407, Article ID: IJM_11_09_037 Available online at http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=11&IType=9 ISSN Print: 0976-6502 and ISSN Online: 0976-6510 DOI: 10.34218/IJM.11.9.2020.037 © IAEME Publication Scopus Indexed HIGH PERFORMANCE WORK SYSTEMS AND ORGANIZATIONAL PERFORMANCE: THE MEDIATING ROLE OF ORGANIZATIONAL CITIZENSHIP BEHAVIOUR Shagufta Ashraf PhD Scholar, Department of Public Administration, University of Kotli Azad Jammu and Kashmir, India Dr. Iftikhar Hussain Supervisor and Dean, Faculty of Computing and Engineering, University of Kotli Azad Jammu and Kashmir, India ABSTRACT The main objective of research paper is to assess the “Impact of High Performance Work System (HPWS) on Organizational Performance (OP) in Banking Sector of Azad Jammu and Kashmir”. It has been well proven from existing body of knowledge that a well devised HPWS is one of the factors which can enhance the performance level in organizations. The present research work will investigate the linkage between HPWS and OP through mediating role of OCB in banking sector of Azad Jammu and Kashmir. Seven HPWS practices i-e Performance Based Rewards, Result Oriented Appraisal, Clear Job Design, High Levels of Training, Internal Mobility and Rigorous Hiring processes have been taken for the study. The adopted indicators of organizational performance constructed on cumulative performance level. Study is exploratory in nature because its main focus is on either HPWS OP relationship will be mediated by OCB or not. Data has collected from employees of cadre Grade 1, Grade 2, and Grade 3 officers of the banks through structured questionnaires. The hypotheses have been tested by correlation and multiple regression analysis. Two steps multiple hierarchal regression is applied to test mediation. Cronbach’s alpha is used to test the validity and reliability of the measured constructs. Similarly, correlation and regression estimates pointed out that all the variables under study were positively related to each other. Outcomes of the study also exhibited positive and direct relationship between HPWS-OP relationships. Furthermore, it has also inveterate that OCB mediated the association between HPWS and OP. The research paper presented insights that rigorous hiring processes, high level of training and performance based rewards of HPWS practices appears as a strongest forecaster of OP and are most effective practices to determine the volumes of OP in the culture of

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Page 1: HIGH PERFORMANCE WORK SYSTEMS AND ORGANIZATIONAL ...€¦ · High Performance Work Systems and Organizational Performance: The Mediating Role of Organizational Citizenship Behaviour

http://www.iaeme.com/IJM/index.asp 387 [email protected]

International Journal of Management (IJM) Volume 11, Issue 9, September 2020, pp. 387-407, Article ID: IJM_11_09_037

Available online at http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=11&IType=9

ISSN Print: 0976-6502 and ISSN Online: 0976-6510

DOI: 10.34218/IJM.11.9.2020.037

© IAEME Publication Scopus Indexed

HIGH PERFORMANCE WORK SYSTEMS AND

ORGANIZATIONAL PERFORMANCE: THE

MEDIATING ROLE OF ORGANIZATIONAL

CITIZENSHIP BEHAVIOUR

Shagufta Ashraf

PhD Scholar, Department of Public Administration,

University of Kotli Azad Jammu and Kashmir, India

Dr. Iftikhar Hussain

Supervisor and Dean, Faculty of Computing and Engineering,

University of Kotli Azad Jammu and Kashmir, India

ABSTRACT

The main objective of research paper is to assess the “Impact of High

Performance Work System (HPWS) on Organizational Performance (OP) in Banking

Sector of Azad Jammu and Kashmir”. It has been well proven from existing body of

knowledge that a well devised HPWS is one of the factors which can enhance the

performance level in organizations. The present research work will investigate the

linkage between HPWS and OP through mediating role of OCB in banking sector of

Azad Jammu and Kashmir. Seven HPWS practices i-e Performance Based Rewards,

Result Oriented Appraisal, Clear Job Design, High Levels of Training, Internal

Mobility and Rigorous Hiring processes have been taken for the study. The adopted

indicators of organizational performance constructed on cumulative performance

level. Study is exploratory in nature because its main focus is on either HPWS – OP

relationship will be mediated by OCB or not. Data has collected from employees of

cadre Grade 1, Grade 2, and Grade 3 officers of the banks through structured

questionnaires.

The hypotheses have been tested by correlation and multiple regression analysis.

Two steps multiple hierarchal regression is applied to test mediation. Cronbach’s

alpha is used to test the validity and reliability of the measured constructs. Similarly,

correlation and regression estimates pointed out that all the variables under study

were positively related to each other. Outcomes of the study also exhibited positive

and direct relationship between HPWS-OP relationships. Furthermore, it has also

inveterate that OCB mediated the association between HPWS and OP. The research

paper presented insights that rigorous hiring processes, high level of training and

performance based rewards of HPWS practices appears as a strongest forecaster of

OP and are most effective practices to determine the volumes of OP in the culture of

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High Performance Work Systems and Organizational Performance: The Mediating Role of

Organizational Citizenship Behaviour

http://www.iaeme.com/IJM/index.asp 388 [email protected]

banking sector of AJ&K. Therefore, it has proven that if high performance human

resource management practices are designed prudently and subsequently executed in

such a way that it becomes challenging for the potential competitors to reproduce then

only organizations upshots competitive edge.

JEL Code: M12, Personnel Management, Executives; Executive Compensation

Key words: Human Resource Management, High Performance Work System,

Organizational Performance, Organizational Culture, Banking Industry, Azad Jammu

and Kashmir.

Cite this Article: Shagufta Ashraf and Iftikhar Hussain, High Performance Work

Systems and Organizational Performance: The Mediating Role of Organizational

Citizenship Behaviour, International Journal of Management, 11(9), 2020,

pp. 387-407.

http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=11&IType=9

1. INTRODUCTION

Financial sector is one of the very important parts of services sector of Pakistan. Country‟s

economic growth is determined by the rapid pace of activities nested in the financial sector.

The financial sector of Pakistan has been witnessing high growth since the last two decades,

reflected by increased advances, deposits, and securities investment (State bank of Pakistan,

2016). Due to increase of branch network, competition among banks has increased. In this

intense competition, banks can only survive by providing superior services through

innovation and continuous improvements. According to Matzler & Renzl, (2007), employee

performance is indispensable for improving the services sector of any country. The high

performance work practices (HPWPs) give positive signals to the employees that organization

is concerned about them in order to improve the quality and productivity of the work of

employees (Tang and Tang, 2012). These positive signals result into the high employee

output, and resultantly organizational performance is also improved Tregaskis, Daniels,

Glover, Butler & Meyer, 2013.

Globally, as well as in Pakistan, there is growing realization that increasing focus on

employees can enhance the performance of an organization. Human Resources departments

are trying to prove that they add value to the organization‟s performance. They are battling to

justify the reasons for their existence in organizations. However, perhaps one of the reasons

that HR has not been more successful in communicating the importance of what they do is

because they have tended not to express it in economic terms. Researchers like MacDuffie

(1995), Delery and Doty (1996), Boselie, Dietz, & Boon (2005), Danford et al (2008), Guthrie

et al (2009), Fabling and Grimes (2010) have worked hard to establish the empirical

relationship between human resource management and organizational performance.

The influences of HRM practices on OP have become a foremost research subject in the

concerned field. Maximum research in the field of HRM and OP in literature is organized

around various research approaches. System and strategic approaches on HRM are considered

to be two major perspectives in the field of HRM-OP relationship. According to system

approach described by Becker and Huselid 1998; Boxall and Macky, 2007; Mihail &

Kloutsiniotis, 2016; Karetape et al., 2015 it has mainly focused on the over set of HR

practices and their impact on OP. Whereas, strategic approach is based on the conception that

HR practices must be bring into line horizontally towards organizational goals and must

accompaniment each other to accomplish organization‟s strategy Wright and Snell, 1991.

Together these two standpoints provide fundamentals to explore how HR practices and their

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Shagufta Ashraf and Iftikhar Hussain

http://www.iaeme.com/IJM/index.asp 389 [email protected]

impact on employee characteristics can lead to desired performance at organizational level ,

Bowen and Ostroff, (2004).

Keeping above arguments in consideration, the aim of the present research work is to

investigate the linkage between HPWS and OP in banking sector of Azad Jammu and

Kashmir. Seven HPWS practices i-e Performance Based Rewards, Result Oriented Appraisal,

Clear Job Design, High Levels of Training, Internal Mobility and Rigorous Hiring processes

has been taken for the study following Huselid (1995). The adopted indicators of

organizational performance are financial and non-financial. The quantitative outcomes of the

present study are constructed on cumulative performance level. For the scale of Organization

Citizenship Behavior (OCB) chosen antecedents measures are conscientiousness, civic virtue

and altruism specific for Asian culture.

Prior studies have revealed that employees with better skills, knowledge and high

motivation alone will be unable to engage talent properly in absence of fitting and appropriate

organizational structure that delivers them with opportunities and scope in such a manner that

they can exert best of their talent to perform their jobs, Huselid, 1995; Combs et al., 2006. A

recent study by Lee and Kim (2010) instituted that employee‟s perception of commitment

based HRM is positively correlated to OCB and interacted HRM practices are significant

predictor of all types of OCB. Gong et al., (2010), Oyemomi (2016), Starbuck (2017),

Siddique and Qammar, (2019) introduced through empirical evidence the relationship

between HPWS and collective OCB from social exchange perspective.

This literature still leaves room for improvement. There are many research studies on this

subject but with respect to Pakistani organizations, particularly Pakistani banks the research

efforts are at the shallow end of the research pool. To the best of our knowledge an empirical

study is not available in literature that could explore the indirect and direct effects of HPWS

on OP through mediating variable (OCB) as a relational perspective. This situation creates

opportunity for the current study. The relational perspective designed for present study is

unique in nature as there is no other such study examined in Asian culture generally and in

Azad Jammu and Kashmir Pakistan particularly. Therefore, there was a need to study the

relationship between high performance work practices and employee performance in the

Pakistani context. Therefore, such scenario led to the development of following research

questions:

What is the impact of HPWS on OP in the banking industry of AJ&K?

What is the relationship between HPWS and OCB (Service Oriented)?

Does OCB mediate relationship between HPWS and OP in banking industry of

AJ&K?

2. LITERATURE REVIEW AND DEVELOPMENT OF RESEARCH

HYPOTHESES

2.1. Banking Sector in Pakistan an Overview

Around the globe generally and in Pakistan particularly, the researchers have started to

explain that in order to have better organizational performance the focus should be shifted to

employees. It has been tried by human resource departments to establish that the human

resources play an essential role in OP.

The departments are putting their utmost efforts to justify that why they should be the part

of firms. Human Resources have not been efficient in communicating their worth because

they have not been able to convey this in term a financial benefit to the organizations. The

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High Performance Work Systems and Organizational Performance: The Mediating Role of

Organizational Citizenship Behaviour

http://www.iaeme.com/IJM/index.asp 390 [email protected]

empirical linkage between HRM and OP have been established by various researchers

includes Huselid, (1995), MacDuffie (1995), Delery and Doty (1996), Boselie, Dietz &

Boone (2005), Danford et al (2008), Guthrie et al (2009), Fabling and Grimes (2010). There is

margin of enhancement in literature is available. There are numerous studies on the record but

in context of Pakistani organization and more specifically organizations in Azad Jammu and

Kashmir and particularly banking sector in AJ&K there is a huge gap in the research. These

circumstances afford scope for the current study.

In order to carry out current research work, research has been done on the banking

industry of AJ&K Pakistan. Before laying out the objectives of the study and questionnaire,

an overview of banking sector has been discussed. The banking industry in Pakistan has

evolved significantly since the time it was established. To date the banking industry has been

contributing substantial part in the economy of country. There are 25 private banks which are

local, public sector has four banks and the number of banks operated by foreigners are seven

out of which four are meant for special purpose. The total number of branches operating

across the country are 9087 (State Bank of Pakistan‟s report 2010). As per the report

published by SBP (2010) the banking sector made astonishing progress in last decade. In

early 90s the government started to privatize the banks by using several modes of

privatization.

Muslim Commercial Bank (MCB) was purchased by a local Pakistani. The share of ABL

(Allied Bank Limited) were sold to its employees. The shares of UBL AND HBL were sold to

foreigner investors. Some shares of NBP were sold to local public. There was an increase in

the profit earned between 2000 and 2007, a decrease has been seen in past few years (SBP

2010). An increase in inflation and bad economic situation reducing the capacity of locals to

pay back loans to bank. It has been playing a major role in bad debts. The continuous

proliferation in banking industry operating in Pakistan clearly depicts that the banks still can

profit from the market. The increasing number of banks in Pakistan increasing the

competition among them.

With increased number of banks in market, the banks have to shift their focus, to have

more reliance on internal resources (SBP report 2010). To get competitive edge from other

banks in competition, the banks must have to focus on their human resource by implementing

HPWS.

2.2. Organizational Performance

Some of the imminent scholars of the field have different opinions about the performance of

the organization and this dissent has been an important issue in the field. The performance

was elaborated by three Es include Economy, Effectiveness and Efficiency (Javier, 2002).

The research statistics of the Richard et al., (2009) reflect that the performance of the

organization which reinforcing the three specific aspects of the outcomes of the firm, the

performance of the financial institutions such as profits, return on the investments, the

performance of the product market which include the sales the share of market., the return of

shareholder the economic value which is added to the performance. The OP is main driving

force of organization, which is mainly aimed to achieve the goals by utilizing the main

resources in the efficient as well as effective manner (Daft, 2000).

There are number of techniques and methods available to measure the OP. The most

significant method to measure the OP is what has been achieved and this method is being

used in many researches. The key indicators of performance (KPIs) are referred by mainly

looking at financial results such as profitably and productivity. The broader concept of the

performance, which is relied on both which has been accomplished and how it has been

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Shagufta Ashraf and Iftikhar Hussain

http://www.iaeme.com/IJM/index.asp 391 [email protected]

accomplished. OP is the most significant factor to have the in depth view of the effectiveness

and the efficiency which in turn are related to organizational objectives, Al-Tit & Hunitie,

2015, HO,2008. There are number of methods being proposed to measure the OP which are

broadly divided into two main types. One of them is considering financial indicators and the

other is by considering non-financial indicators. Sharabati, Jawad and Bonis (2010) used

productivity of organization, profitability of organization and organization market valuation in

order to have in depth understanding of performance of a pharmaceutical company in Jordan.

Chong et al. (2011) analyzed the linkage between performance of the corporations and supply

chain using various parameters which includes how many items were returned, how much

sold, consumer feedback whether positive or negative to calculate OP. Lee and Yu (2004)

measured OP of industrial sector. The parameter chosen to assess OP was how much profit

made, how much was the sale in industry. The parameters used to measure the OP of

insurance companies were the growth rate and investment return. The parameters to measure

the OP of hospitals include how long patient remained admitted in hospital and how much

beds in hospital are occupied.

2.3. HPWS and OP, Theoretical Relation with Empirical Evidence

Numbers of studies have established that HPHRP are directly related to OP, as Zhang & Jia,

2010, Subramony, 2009, Zhang & Ma, 2008, Datta et al., 2005. On the way to define HPHRP

is a group of distinct but interconnected HR practices planned to improve worker‟s knowledge

„skills and efforts, Takeuchi et al., 2007, P, 1069. With ever increasing competition and world

is turning into the global village it is imperative to have a properly designed HR system

Osman et al., 2011.

This has been an important subject for research over the years that how HR practices

effect and contribute in achieving the organizational goals and to keep them ahead of others in

competition Chen & Huang, 2009, Combs et al., 2006, Montoro et al., 2011; Subramony,

2009, Zhang & Jia, 2010. A lot of research has been done in HRM field to reach a conclusion

that which will be the characteristics of HRM system which will keep an organization ahead

of others in competition. HPHRP is the set of HR Practices that inculcate skills in employees,

give them confidence to involve themselves in decision making Sun, Aryee, & Law, 2007.

Still the theorists are unable to establish that how the firm performance can be directly

linked to HPWS. Becker & Huselid, 2006; Chadwick & Dabu, 2009. In other words, they

believe that HPWS can affect OP but how it effects it is still unclear. These are not the HRPs

but because of these practices the efforts put by the employees have impact on OP (Way,

2002). Therefore, HPWS has positive impact on workforce and persuade them to contribute in

OP using optimal of their capabilities. Numerous researches have proven empirically HRM-

OP relationship and delivered a base for generation of the hypothesis which states that HRM

practices predict OP significantly. Amin, Ismail at el., 2014; Chan & Mak, 2012 Chan &

Katou, 2007, Ho & Galang, 2011.Therefore, based upon above mentioned literature the

researcher developed following hypotheses that either HPWS has link with OP H1, whereas

H2 is trying to explore that either HPWS and such correlation is positively related to OP or

not.

H1: HPWS is positively associated with organizational performance in banking sector of

Pakistan or HPWS predicts OP

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High Performance Work Systems and Organizational Performance: The Mediating Role of

Organizational Citizenship Behaviour

http://www.iaeme.com/IJM/index.asp 392 [email protected]

2.4. HPWS and Service Oriented OCB, Theoretical Linkage

2.4.1. Organizational Citizenship Behavior

The initial literature about OCB can be found in the work by Barnard (1938) and Kartz (1964)

who considered “willingness to cooperate” and “innovative and spontaneous behavior” for an

organization to function successfully little important. The scholars and researchers started

their work on this topic after the Organ and his mates (Bateman & Organ; Smith, organ,

&Near, 1983) coined the term OCB in 1980s that define “willingness to cooperate” and

“innovative and spontaneous behavior”. OCB is well-defined by Organ (1988) as the

motivation of employees which has nothing to do with their job description and they are not

paid for those but that motivation has significant effect on organizational performance.

In some studies, conducted by researchers they argued that OCB is the part of employee

job description and it is binding on them to keep this motivation (Lam et al., 1999, Morrison,

1994). As per the suggestion of Organ (1997:88), while explaining OCB if it was possible it

must not be taken as extra role of employees apart from their regular duties. There are number

studies establishing the fact that OCB furnish positive results on employee‟s job satisfaction

(Bateman & Organ, 1983) and increases their performance (Mackenzie, Possakoff, & Fetter,

1991) and furthermore have positive impact on performance of group (Podaskoff, Ahearne, &

Mackenzie, 1997). Finally, it increases the efficiency of an organization as it provides better

service to customers (Dunlop & Lee, 2004) and as the result it makes the organization better

profit earning organization (Koys, 2001). A meta-analysis carried out further established the

fact that OCB is very significant to predict organizational outcomes (Podsakoff et al., 2009).

As OCB has widely accepted significance a lot of work has been done to figure out variables

that effects citizenship performance of employees (Chiaburu et al, 2011). This study

considers three major dimensions that are most likely associated with HPWS and Asian

culture.

In modern day age and in current competitive environment an employee must be capable

enough and must be given chances and opportunities to show Organization Citizenship

Behavior. In the study carried out by Messersmith, (2011) and her team, they pointed out an

important argument which is when someone try to establish the linkage between HPWS and

Performance of an organization mediated by OCB and he considers discretionary role of an

employee as only parameter to keep organization ahead of others is competition then there is

gap in literature. Another issue remained unsettled which is whether HPWS can encourage

and keep OCB for too long. Many single and individual practices when grouped together

form HPHR system which then in turn has effect on performance of organization. High

Performance Human Resource Practices have been providing to employees job security,

providing them training to enhance their skills, providing them promotions based on their

performance and appropriately defined career paths.

H2: HPWS is positively associated with OCB in banking sector of AJK

H3: OCB mediates the relationship between HPWS and organizational Performance in

banking sector of AJK or

H3: OCB governs and mediates the association between HPWS and OP

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Shagufta Ashraf and Iftikhar Hussain

http://www.iaeme.com/IJM/index.asp 393 [email protected]

Conceptual Model

Figure 1 Conceptual Model

4. RESEARCH METHODOLOGY

4.1. Research Sample and Data Collection

The data has been gathered through self-completion structured questionnaires, the responses

of the respondents have been acquired. Selected population of the present study for which

data has been collected for further statistical interpretations to support “Generalization” hall

mark of science is banking sector of Azad Jammu and Kashmir. In this regard Grade 1,2 and 3

are most appropriate respondents as they fulfill the criterion of affiliating to the clearly

defined group of managerial level. A self-managed questionnaire was embraced for the

present study which was constituted by six distinct instruments. 800 questionnaires were

distributed by hand to all banks branches available in Azad Jammu and Kashmir. Codes were

given to the filled returned questionnaires and then the raw data was entered into Microsoft

Excel for further processing. The received questionnaires were 500 with response rate 62.5%

which were used for further analysis.

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High Performance Work Systems and Organizational Performance: The Mediating Role of

Organizational Citizenship Behaviour

http://www.iaeme.com/IJM/index.asp 394 [email protected]

4.2. Measurements

To measure the HPWS, twenty-eight (28) items scales were embraced from the work of

Lepak and Snell (2002). This scale best fits in Asian culture and have already been used in

recent study conducted in Japanese culture context, Takeuchi et al., 2007. For developing

appropriate scale of HPWS more items were adopted from Sun et.al. 2007, in China which

was originally developed by Snell and Dean 1992 to ensure more reliability. Seven HPWS

practices i-e Performance Based Rewards, Result Oriented Appraisal, Clear Job Design, High

Levels of Training, Internal Mobility and Rigorous Hiring processes has been taken for the

study. Multiple item scale was employed with 5-point Likert type anchors ranging from 1

(strongly disagreed) to 5 (strongly agreed).

In order to measure selected antecedents of OCB i-e Civic Virtue, Altruism and

Conscientiousness fourteen items scale were adopted from relevant sections of organization

Citizenship Behavior scale. Podsakoff and MacKenzie (1994) were originally developed this

scale. Minor modifications were made in questionnaire to suit study‟s plenty Kamran (2015).

The word “Organization” is replaced by the word “Bank”. For self-ratings of OCB items, the

word “Bank Employees” is added to each item with the response scale ranging 1 (Strongly

Disagreed) to 5 (Strongly Agreed).

Financial and non-financial indicators are adopted for the performance of firm. All the

questions in the questionnaire are having closed ended format in which multiple options have

been given. From the given options respondents are asked to tick most suitable option. Results

revealed from the study are constructed on the cumulative performance level. Organization

performance is the dependent variable of the study. Several control variables were also

included in the analyses to eliminate alternative explanations of the findings. For analysis, the

study controlled for age, qualification, experience, gender, and length of service in bank.

These variables were considered important for the reason that they might influence the

perceptions of employees about the level of HPWS and in turn influence firm performance

(Wood, 1999; Chang, 2005; Boselie et al., 2005).

5. DATA ANALYSIS AND RESULTS

5.1. Validity and Reliability

Following Tit & Nakhleh, (2014), comparative fit index (CFI) and square error of

approximation (RMSEA) applied to check the validity of the constructs and fit indices such as

χ2/df (Al-). Cronbach‟s alpha coefficient (α) used to test the reliability of the constructs and

the results of above-mentioned analysis showed significant and reliable estimates, with χ2/df

< 2, CFI above 0.92, RMSEA < 0.081 and α = 0.873.

5.2. Characteristics of the Research Respondents

As discussed earlier 500 questionnaires were filled from Grade 1, 2 and 3 officers of banking

sector of AJ&K. As majority of the banks were in approach of an author so maximum

response (results) were gathered candid. At the analysis level it was found that males were

dominating. Among respondents, majority are male respondents (n=419) constituting 83.8%

of sample size. Whereas females constitute 16.2 % of the sample (n=81). Table-1 echoes the

state of numeric data.

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Shagufta Ashraf and Iftikhar Hussain

http://www.iaeme.com/IJM/index.asp 395 [email protected]

Table 1 Gender, Age, Education and Marital Status

Gender Frequency Percent

Males 419 83.8

Females 81 16.2

Age (Years)

20- 30 284 56.8

31-40 168 33.6

41-50 42 8.4

51-60 6 1.2

61 ≥ 0

Marital Status

Single 144 28.8

Married 356 71.2

Level of Education

HSSC 6 1.2

Graduation 122 24.4

M.A/ Masters 256 51.2

Diploma Holders 10 2

Others 6 1.2

5.3. Correlation Analysis

The objective of this study was to find the relationship between High performance work

practices and employee performance with a mediating role of OCB. The estimated results

reported in Table-2 and 3 shows that independent, dependent and mediating variables have

positive and significant correlation with each other. The application of correlation was done to

catch the dyad wise relationship among variables i-e HPWS, OCB, and OP.

Table 2 Correlations among HPWS and OP

Rigorous

Hiring

Processes

Internal

Mobility

Clear

Job

Design

High

Levels of

Training

Empowerment

and

Participation

Result

Oriented

Appraisal

Performa

nce Based

Rewards Perf.

RHP 1

IM .635**

1

CJD .538**

.601**

1

HLT .568**

.563**

.624**

1

EAP .429**

.479**

.440**

.459**

1

ROA .425**

.595**

.526**

.570**

.513**

1

PBR .433**

.516**

.517**

.409**

.604**

.575**

1

Perf .502**

.527**

.505**

.526**

.438**

.491**

.487**

1

**Correlation is significant at the 0.01 level (2-tailed).

Table-2 indicates that the factors RHP, IM, CJD, HLT, EP, ROA and PBR are

independently and positively correlated with Organizational Performance (OP) and it is also

highly significant at 1% levels Resultantly, Hypothesis 1and 2 of this study was

acknowledged. It is noticeable that the maximum correlation (r =.527) is existed between IM

and OP, which is trailed by the association (r =.526) between HLT and OP, (r=.505) between

CJT and OP and (r=.502) between RHP and OP. The feeble correlation (r.491) is departed

between ROA and OP, (r= .487) between PBR and OP and (r =.438) between EP and OP.

Likewise, RHP practices are dyad wise correlated positively with one another. They are also

significant statistically at P- value 0.000. Amongst the four HR practices, the relationship (r

=.635) between RHP and IM is the highest, followed by the link (r =.601) between CJD and

IM.

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High Performance Work Systems and Organizational Performance: The Mediating Role of

Organizational Citizenship Behaviour

http://www.iaeme.com/IJM/index.asp 396 [email protected]

Table 3 Correlations among OCB and OP

Performance Altruism Conscientiousness

Civic

Virtue

Performance 1

Altruism .559**

1

Conscientiousness .505**

.428**

1

Civic Virtue .557**

.506**

.447**

1

**. Correlation is significant at the 0.01 level (2-tailed)

Table-3 exhibits the correlations among the Organizational Citizenship Behavior variables

with their coefficients. Significant correlation among all Organizational Citizenship Behavior

variables has been found. The Altruism is strongly and significantly correlated with power

Civic Virtue but has weak correlation with Conscientiousness. Likewise, Civic Virtue also

possesses positive and significant correlation with Conscientiousness but correlation between

these two variables has not been found significant.

5.4. Multiple Regression Analysis

Multiple regression analysis has been used to explore the correlation between multiple

independent or predictor variables and a dependent variable also termed as criterion variable

Pearson (1908). For the study least square linear regression has been executed to find out

following relationships.

Organizational Performance (OP) = function (7 HPWS)

Organizational Citizenship Behavior (OCB) = function (07 HPWS)

The hypothesized correlation between independent variables i-e seven HPWS practices

and dependent variables OP may be presented in the form of regression equations as follows:

OP =f (Con. Var. , RHP, IM, CJD, HLT, EP, ROA, PBR)

-1

OCB =f (Con. Var. , RHP, IM, CJD, HLT, EP, ROA, PBR)

-2

Whereas:

α = a constant

β,Ω,Ø = the effect in independent variable on dependent variable, hypothesized to be

positive; and ε = the “noise” term reflecting other factors that influence dependent variable.

Covariance are Controlled Variables e.g. Gender, Age, Marital status and Qualification of the

respondents.

RHP= Rigorous Hiring Processes, IM= Internal Mobility, CJD= Clear Job Design, HLP=

High Levels of Training, EP= Empowerment and Participation, ROA= Result Oriented

Appraisal, PBR= Performance Based Rewards, OP in this study is taken as first dependent

variable presenting organizational performance for first regression analysis model. In the

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second multiple regression analysis dependent variables OCB is substituted with OP

representing Organizational Citizenship Behavior.

To estimate the effect of HPWS on OP, we estimated the equation 1 and results are

exhibited in the table- 4 which demonstrate the standardize regression coefficient (β) and

under standardized regression coefficients (β) and model intercept. All the demographic

variables (Age, Gender, Marital Status and Qualification) are statistically significant and have

positive contribution to organizational performance. Similarly, high performance work system

practices are appeared to be significantly affecting organizational performance (OP). Only

one practice Clear Job Design (CJD) is significant at marginal rate. Performance Based

Rewards (PBR), High Levels of Training (HLT) and Rigorous Hiring Processes (RHP) are

most effective practices to determine the volumes of OP. The value of R2 (.421) depicts that

42% of the deviation in the model described by the explanatory variables.

Table 4 Regression Analysis, Direct Impact of HPWS, Results of Regression Analysis with (HPWS)

as Predictors of OP

Variables

Unstandardized

Coefficients B

B Std.

Error

Standardized

Coefficients

Beta

t-statistics Sig.

Age 0.053 0.014 0.058 2.321 0.007

Gender 0.013 0.14 0.016 1.981 0.031

Marital Status 0.02 0.021 0.019 2.013 0.002

Education 0.011 0.015 0.013 3.023 0.003

Rigorous Hiring

Processes (RHP) 0.109 0.04 0.148 2.751 0.006

Internal

Mobility(IM) 0.08 0.041 0.116 1.967 0.050

Clear Job Design

(CJD) 0.057 0.035 0.091 1.635 0.103

High Levels of

Training(HLT) 0.125 0.039 0.179 3.179 0.002

Empowerment and

Participation(EP) 0.046 0.043 0.056 1.084 0.279

Result Oriented

Appraisal(ROA) 0.07 0.043 0.091 1.636 0.103

Performance Based

Rewards(PBR) 0.121 0.042 0.157 2.877 0.004

Constant 1.324 0.13

10.194

R2 0.421

Adj R2 0.41

Model F 40.643

0

Durbin-Watson 1.552

In order to examine the impact of HPWS on organizational citizenship behavior (OCB),

we estimated equation no. 2 and results are illustrated in table-5. The results showed that the

demographic factor age and education have positive and significant impact of OCB whereas

other two demographic factors are insignificant but have positive beta sign. As a result,

HPWS dimensions are concerned with six out of seven practices with positive expected beta

coefficients. Only one practice surfaced non-significant that is “Internal Mobility” and it is

not surprising because there are poor internal mobility practices exists in banking sector of

AJ&K. The entire model illuminates 42.4% of the variance (R2

= .424).

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Table 4 (1) Results of Regression Analysis with HPWS as Predictor of OCB

Variables B Beta

Age 0.054** .058*

Gender 0.014 .015*

Marital Status 0.02 0.019

Education .013** 0.016

Rigorous Hiring Processes

(RHP) 0.107*** .159***

Internal Mobility(IM) 0.02 0.029

Clear Job Design (CJD) 0.037** .057**

High Levels of Training(HLT) 0.028* .048*

Empowerment and

Participation(EP) 0.118*** .166***

Result Oriented

Appraisal(ROA) 0.057*** .087***

Performance Based

Rewards(PBR) 0.125*** .176***

Constant 1.012***

R2 0.424

Adj R2 0.418

Model F 72.92***

Durbin-Watson 2.013

* p<05 **p<.01 ** p<.001

5.5. Impact of OCB Dimensions on OP

To estimate the impact of OCB dimension on OP, we developed the following model.

Organizational Performance =f (Altruism, Conscientiousness, Civic Virtue)

3- -3

For empirical analysis we estimated equation 3 and results are reported in table-5 below.

Table 5 Results of Regression Analysis with OCB as Predictors of OP

Variables Unstandardized

Coefficients B

B Std.

Error

Standardized

Coefficients

Beta

t-stat Sig.

(Constant) 1.324 0.117 11.359 0.000

Altruism 0.216 0.031 0.306 6.891 0.000

Conscientiousness 0.168 0.03 0.243 5.675 0.000

Civic Virtue 0.225 0.034 0.294 6.538 0.000

R Square 0.458

Adjusted R Square 0.453

Model F 111.36 0.000

Durbin-Watson 1.695

The results represented in all three variables were found to be statistically significant

predictors of organizational performance. These variable are Altruism, Conscientiousness and

Civic Virtue has positive effects on OP. Estimated model has adjusted R2

= 0.453, which

designates that the model accounts for 45.3% of the variance in Altruism measures as

significant at (ρ= 0.000) B=.306 powerful and statistically significant OP. Conscientiousness

(β = .243, ρ= .000) and Civic Virtue (β = . 294, ρ= .000).

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5.6. Mediation, OCB as Mediator between HPWS and OP

The subsequent phase is to examine the hypothesis related to OCB as mediator between

HPWS and OP measures. The crucial notion of mediation is elucidated in Figure 2. The

mediating part of OCB has been evaluated and established on multiple regressions that had

been recommended by Baron and Kenny (1986).

Figure 2 Mediating Role of OCB between HPWS and OP

In the present study one of the hypotheses is to check whether the relationship between

HPWS (X) and OP (Y) is mediated by OCB (C). Table-6 exhibits that OP estimates and

HPWS succeed in first step of the mediation. The results show that the second condition has

been recommended by Baron and Kenny (1986), that the regression results between

independent variable and mediating variables (X and C) mandatory to be statistically

momentous in order to gear up for third step to test the mediation. Third state is also

satisfactory. The results revealed of the relationship among HPWS and mediator variable

OCB indicate the statistically significant impact of the dependent variables as five out of

seven practices appeared as significant with positive expected sign. As mentioned earlier,

table -6 shows that the results of OCB mediation. In this context, in step 1, HPWS are

regressed with OP. Six practices out of seven practices emerged as significant. Then in step 2,

HPWS was regressed with OCB perceived as mediator in theoretical model. The results show

5 practices appeared as significant out of seven practices. Thus the condition for mediation

has been proved.

Table 6 In Between HPWS-OP Relationship OCB Mediates

Step 1

R

R.

Square

Adjusted

R

Square

Std.

Error of

the

Estimate

Change Statistics

R.

Square

Change

F.

Change df1 df2

Sig. F

Change

.648a 0.421 0.41 0.44741 0.421 40.643 7 392 0

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Estimated Coefficients

Model 1

Unstandardized

Coefficients

Standardized

Coefficients t Sig.

Collinearity

Statistics

B Std.

Error Beta Tolerance VIF

(Constant) 1.324 0.13

10.194 0

Rigorous Hiring

Processes 0.109 0.04 0.148 2.751 0.006 0.512 1.96

Internal Mobility 0.08 0.041 0.116 1.967 0.05 0.427 2.34

Clear Job Design 0.057 0.035 0.091 1.735 0.1 0.478 2.09

High Levels of

Training 0.125 0.039 0.179 3.179 0.002 0.467 2.14

Empowerment and

Participation 0.046 0.043 0.056 1.084 0.279 0.56 1.78

Result Oriented

Appraisal 0.07 0.043 0.091 1.636 0.103 0.481 2.08

Performance Based

Rewards 0.121 0.042 0.157 2.877 0.004 0.497 2.01

a. Dependent Variable: OP

Step 2

R R

Square

Adjusted

R Square

Std. Error

of the

estimate

Change Statistics

R

square

change

F

Change df1 df2

Sig.F

change

.695a 0.483 0.473 0.46945 0.483 52.217 7 392 0

Estimated Coefficientsa

Model 2 Unstandardized

Coefficients

Standardized

coefficients t Sig.

Collinearity Statistics

B

Std.

Error Beta Tolerance VIF

(Constant) 1.038 0.136 7.617 0.000

Rigorous Hiring

Processes 0.234 0.042 0.285 5.609 0.000 0.512 1.955

Internal Mobility 0.102 0.043 0.133 2.391 0.017 0.427 2.342

Clear Job Design 0.143 0.037 0.205 3.894 0.000 0.478 2.093

High Levels of

Training -0.019 0.041 -0.024 -0.454 0.650 0.467 2.142

Empowerment

and Participation 0.013 0.045 0.014 0.285 0.776 0.56 1.784

Result Oriented

Appraisal 0.078 0.045 0.091 1.732 0.084 0.481 2.081

Performance

Based Rewards 0.143 0.044 0.167 3.249 0.001 0.497 2.013

a. Dependent Variable: OCB

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Step 3

R R

Square

Adjusted

R

Square

Std.Error

of the

estimate

Change Statistics

R

Square

Change

F

Change df1 df2

Sig.F

Change

.648a 0.421 0.41 0.44741 0.421 40.643 7 392 0

Estimated Coefficientsa

Model 3

Unstandardized

Coefficients

Standardized

Coefficients t Sig

Collinearity

Statistics

B Std.

Error Beta Tolerance VIF

Constant 1.244 0.15

8.531 0.000

Rigorous Hiring

Processes 0.087 0.04 0.118 0.454 0.650 0.49 2.04

Internal Mobility 0.07 0.04 0.101 1.63 0.104 0.386 2.589

Clear Job Design 0.041 0.04 0.066 1.126 0.261 0.432 2.313

High Levels of

Training 0.127 0.04 0.182 3.251 0.001 0.474 2.11

Empowerment

and Participation 0.045 0.04 0.054 1.056 0.291 0.558 1.791

Performance

Based Rewards 0.108 0.05 0.14 0.385 0.756 0.437 2.289

Mediator

(OCBHPWS) 0.077 0.05 0.145 1.969 0.047 0.189 5.293

a. Dependent Variable: OP

Step 3 exhibits that the HPWS dimensions which has been appeared as significant in step

1, most of the practices happened to be insignificant in third step which reproduces full

mediation of organizational citizen behavior between HPWS and OP.

Table 7 Summary of the Results

The tested hypothesis to address the research questions with finding are presented in table 7

below for convenient of the reader.

Hypothesis Tested Correlation

Results

Regression

Results

H1: HPWS is positively associated with organizational

performance in banking sector of Pakistan, OR HPWS predicts

OP

Accepted Accepted

H2: HPWS is positively associated with OCB in banking sector

of Pakistan.

Accepted Accepted

H3: OCB governs and mediates the association between

HPWS and OP

Accepted Accepted

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The above-mentioned variables HPWS demonstrated increase in organizational

performance through enhancing RHP, IM, HLT and Performance Based Rewards of the

employee. Only Empowerment and Result Oriented Appraisal are such HPWS practices

which are failed to show powerful and positive impact on OP. Moreover, results of research

indicate that if a firm may acquire the best Rigorous Hiring Processes, provide the

opportunities of High Levels of Training as well as allow its workers to participate in the

decisional processes and empower its employees by involving them then outcomes will be

substantial. In addition, providing compulsory skills as well as well implemented feedback

processes resulting advanced level of OP. Current study exhibits that the five practices have

positive impact on the level of OP that is very satisfactory indication for the current study.

Hence hypotheses 3 of the current study are accepted i-e OCB mediates between HPWS and

OP.

6. FINDINGS, CONCLUSION AND DISCUSSIONS

The main objective of the current study has been served substantially, that was to explore the

impact of high performance work system which covers the modern trends and conceptual road

map to the high performance of organizations in the occurrence of HPWS practices as well as

absence of HPWS. In broader spectrum of relational perspective attempt was made to explore

mediating part of OCB between HPWS and OP carefully according to specific concentration

to highlight the eminent possible role of performance in banking sector of AJ&K Pakistan.

It has been viewed that HPWS is the major source of competitive advantage for an

organization and can improve the performance at individual and organizational-level. The

objective of this study was to investigate the impact of HPWS on the organizational

performance, while the mediating effect of OCB was also examined HPWS and OP of

banking sector of AJK Pakistan.

The results confirmed that there was significant positive relationship between HPWS;

organizational performance HPWS practices predict OP, either directly or indirectly through

OCB. Thus estimated results supported hypotheses (H1, H2, H3,) of the study. These finding

are consistent with the previous studies from other cultures (e.g. Cooke et al. 2016; Kehoe and

Wright 2013; Karatepe 2013; Snape and Redman 2010). Similarly, mediation analysis

revealed that OCB fully mediated the relationship of HPWS and organizational performance.

Thus, results supports hypothesis H3 related with mediation of OCB in HPWS and OP

relationships. Regarding the positive impact of HPWS practices on OP found in this study,

similar results have been revealed in the literature (e.g. Amin et al., 2014; Chan &Mak, 2012;

Chand & Katou, 2007; Moideenkutty et al., 2011; Osman et al., 2011; Theriou and

Chatzoglou (2014); Shehata (2015).

This study proposes that HPWS significantly marls OP with or without the mediation

process of OCB. The contribution of the predictor‟s value may be improved if the scope of the

research may increase in order to take account of possession structure, economic conditions,

size and share in the market of KSE registered profitable banks because of the fact that they

are unwaveringly related with monetary presentation commonly and explicitly bank recital.

Decisive management of banking industry should initiate to utilize these HRM practices

as a bundle i-e HPWS to make HR function strategically proactive as recommended by

Brockbank,(1999). A worthwhile management of HPWP system will generate and withstand

competitive advantage resulting improvement in OP. Furthermore, OCB will create deeper

impact on relationship between HPWS and OP. Therefore, it is imperative for banking

industry of AJ&K to make it guarantee that investment on their human resources and HRM

practices (HPWS). It will recruit and retain competent human capital.

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