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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
High Performance Work Systems and Organizational Performance: The Mediating Role of
Organizational Citizenship Behaviour
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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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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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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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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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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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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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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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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.
High Performance Work Systems and Organizational Performance: The Mediating Role of
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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
High Performance Work Systems and Organizational Performance: The Mediating Role of
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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
High Performance Work Systems and Organizational Performance: The Mediating Role of
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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.
Shagufta Ashraf and Iftikhar Hussain
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